Edgar Filing: ANGLOGOLD ASHANTI LTD

Page 1

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 or 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

Report on Form 6-K dated

MARCH 15, 2006

AngloGold Ashanti Limited

(Name of Registrant)

11 Diagonal Street

Johannesburg, 2001

(P O Box 62117)

Marshalltown, 2107

South Africa____

(Address of Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F:

Form 40-F:

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule
101(b)(1):

Yes:

No:

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule
101(b)(7):

Yes:

No:

Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby
furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes:

No:

Enclosures: ANGLOGOLD ASHANTI 2005 ANNUAL REPORT PREPARED IN ACCORDANCE

WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

Annual
Report

The AngloGold Ashanti Limited (AngloGold

Ashanti) Annual Report 2005 presents the operat-

ing and financial results for the period 1 January

2005 to 31 December 2005. They have been pre-

pared in accordance with International Financial

Reporting Standards, the South African

Companies Act No. 61 of 1973 and the Listings

Requirements of the JSE Limited (JSE). The

guidelines of the King Report on Corporate

Governance, 2002 have also been taken into

account. The Annual Report is submitted to the

JSE as well as to the London, New York, Ghana

and Australian stock exchanges and the Paris and

Brussels bourses. It is also submitted to the

US Securities and Exchange Commission (SEC)

on a Form 6-K.

Mineral Resources and Ore Reserves are reported

in accordance with the South African Code for

Reporting of Mineral Reserves and Resources

(SAMREC 2000) and the Australasian Code for

Reporting of Exploration Results, Mineral

Resources and Ore Reserves (JORC 2004).

Competent persons in terms of all these codes

have prepared, reviewed and confirmed the

Mineral Resources and Ore Reserves as reported

in this publication. The Annual Report 2005 con-

tains a summary of the Mineral Resources and Ore

Reserves. A more detailed breakdown that

includes tables and graphs is available separately

in a supplementary document.

AngloGold Ashanti has for the third consecutive

year produced a Report To Society in conjunction

with the Annual Report to ensure a comprehen-

sive understanding of all aspects of the group.

The Report to Society seeks to explain and

assess the economic, social and environmental

aspects of the business.

Both the Annual Report 2005 and the Report to

Society 2005 are available online on the corporate

website at www.AngloGoldAshanti.com, as is the

supplementary document on group Mineral

Resources and Ore Reserves. These documents are

also available on CD or in a printed version, and can

be requested from the contacts listed at the end of

this report.

In addition, AngloGold Ashanti prepares an Annual

Report on Form 20-F which complies with the

accounting principles generally accepted in the

United States. The Form 20-F must be filed with the

Securities and Exchange Commission in the United

States by no later then 30 June 2006 and will be

available on the corporate website and can be

requested from the contacts listed at the end of

this report.

Scope of the report

Throughout this document, dollar or $ refers to US dollars, unless otherwise stated.

Key features 2005

Letter from the chairman and
chief executive officer

AngloGold Ashanti at a glance –
corporate profile

Performance review

Operations at a glance – summary

Summarised group financial results

Summarised group operating results

Non-GAAP disclosure

One-year forecast – 2006

Group value-added statement

Directors and executive management

Group information

Business overview

The gold market

Financial review

Review of operations

Global exploration

Mineral Resources and Ore Reserves

Corporate governance

Risk management

Directors’ approval

111

Secretary’s certificate

111

Independent auditors’ report

112

Remuneration report

113

Directors’ report

118

Annual financial statements – contents

127

Group financial statements

128

Company financial statements

220

Investment in principal subsidiaries
and joint venture interests

246

Glossary of terms

247

The process of producing gold
and rehabilitation

252

Research and development

254

Rights to mine and title to properties

256

Shareholders’ information

264

Administrative information

268

Contents

Forward-looking statements

Certain statements contained in this document

including, without limitation, those concerning the

economic outlook for the gold mining industry,

expectations regarding gold prices, production,

total cash costs and other operating results,

growth prospects and the outlook of AngloGold

Ashanti’s operations, including the completion and

commencement of commercial operations of

certain of AngloGold Ashanti’s exploration and

production projects, its liquidity and capital

resources and expenditure, contain certain

forward-looking statements regarding AngloGold

Ashanti’s operations, economic performance and

financial condition. Although AngloGold Ashanti

believes that the expectations reflected in such

forward-looking statements are reasonable, no

assurance can be given that such expectations will

prove to have been correct. Accordingly, results

could differ materially from those set out in the

forward-looking statements as a result of, among

other factors, changes in economic and market

conditions, success of business and operating

initiatives, changes in the regulatory environment

and other government actions, fluctuations in gold

prices and exchange rates, and business and

operational risk management. For a discussion on

such factors, refer to the risk management section

of this Annual Report.

AngloGold Ashanti undertakes no obligation to

update publicly or release any revisions to these

forward-looking statements to reflect events or

circumstances after the date of the Annual Report

to reflect the occurrence of unanticipated events.

All subsequent written or oral forward-looking

statements attributable to AngloGold Ashanti or

any person acting on its behalf are qualified by the

cautionary statements herein.

•

2005 average dollar gold spot price of $445 per

ounce, 9% higher than 2004.

•

2005 received gold price increased by 11% to

$439 per ounce.

•

Adjusted gross profit up by 6% to $469 million.

•

Capital expenditure up by 23% to $722 million.

•

Adjusted headline earnings down by

26% to $200 million.

•

Total dividend for the year of R2.32 per share,

or $0.36 per ADS.

KEY FEATURES 2005

Financial

KEY FEATURES 2005

Operational

•

Gold production up 6% to 6.2 million ounces

reflecting the inclusion of the full year’s production

from the former Ashanti mines.

•

Total cash costs rose 6% to $281 per ounce mainly

due to inflation and strong operating currencies.

•

Ore Reserves down 20% to 63 million ounces and

Mineral Resources 19% lower at 176 million ounces

as at the end of December 2005.

The year ended 31 December 2005 saw a 6%

production increase to 6.2 million ounces. This

was largely attributable to the inclusion of a full

year’s production from the former Ashanti assets,

in addition to an outstanding performance from

Sunrise Dam in Australia in the first half of the

year, and significant improvements at Morila in

Mali and Mponeng in South Africa. Certain key

assets, namely Obuasi in Ghana, Geita in

Tanzania and Sunrise Dam in Australia, finished

the year with anticipated lower grades. Plans are

in place to move these operations toward optimal

operational and cost levels, which should begin to

be evident by the middle of 2006.

Earlier in the year, AngloGold Ashanti responded

to the ongoing cost pressures associated with the

rising costs of key mining inputs and the strength

of our local operating currencies by implementing

a stringent savings programme designed to

eliminate $110 million in costs by the end of 2005.

Pleasingly, the total savings realised from these

initiatives was $160 million, well in excess of our

target, which helped to limit cash cost escalation

and resulted in a year-end total cash cost for the

group of $281 per ounce.

AngloGold Ashanti endorses the need for the

stringent accounting requirements imposed by

various accounting authorities responsible for

setting standards with the aim of transparency and

international comparability. However, for observers

not familiar with complex accounting detail, these

requirements often have the result of potentially

distorting reported performance. The table on

pages 16 to 20 of this report is presented to assist

shareholders to better understand our results.

Thus the substantial decline in operating profit

from $102 million in 2004 to a loss of $36 million

and a net loss of $160 million for 2005 must be

seen in the light of the accounting treatment of

hedging and the convertible bond. Adjusted

headline earnings for 2005 amounted to

$200 million.

A dividend of 62 South African cents (10 US cents)

per share has been declared for the six months

ended 31 December 2005. This represents a

similar percentage payout to adjusted headline

earnings, as was announced at the mid-year

declaration, resulting in a total dividend for the year

of 232 South African cents (36 US cents) per

share. Given that the group is in a very high capital

expenditure phase, we will continue to manage our

approach to the dividend and capital allocation on

the basis of prudent financial management.

Investor and speculator interest in gold led to the

price reaching a 25-year high of $567 per ounce

in January this year, with an annual average for

2005 of $445 per ounce, 9% higher than in 2004.

The price continued to hold later in the year,

despite a stronger dollar. AngloGold Ashanti

continues to take a positive view of the gold price

and, consequently, will continue to deliver into

maturing forward sales contracts and to increase

the proportion of our production which is exposed

to the higher price for our product.

On 2 August, the company received notice from

the South African Department of Minerals and

Energy that it had been granted its application for

new order mining rights in terms of the Mineral

and Petroleum Resources Development Act. This

development represented the culmination of a

long but constructive engagement with

government, in which AngloGold Ashanti sought

to ensure that both the spirit and letter of the

Mining Charter was fulfilled, bringing certainty to

shareholders and offering employees and the

communities in which we operate new

opportunities for sharing in the wealth creation of

our group. The creation of an Employee Share

Ownership Programme is under consideration

and is being discussed with employee groups.

We deeply regret that 25 employees lost their

lives in workplace accidents during 2005. The

safety of employees on all of our operations

remains a very significant focus of management

attention and resources on all of AngloGold

Ashanti’s operations and particularly in the more

hazardous deep-level mines in South Africa. We

are pleased to note, however, that the group’s

fatal injury frequency rate (FIFR) improved by 26%

to 0.14 per million man hours worked, a 64%

improvement since the group was established in

its current form in 1998. It is noteworthy that

AngloGold Ashanti’s FIFR now compares

favourably to those recorded in the mining

industries of the United States, Canada and

Australia. Management continues both to explore

technical solutions to mining risks and to promote

employee behaviour designed to improve

workplace safety.

Letter from the chairman and chief executive officer

The group’s South Africa region continues to make

good progress in the campaign against HIV and

AIDS, in respect of both prevention and treatment.

During the year, health care staff conducted more

than 10,000 voluntary counselling sessions with

employees – 32% of our South African employees

attended voluntary counselling clinics during the year,

compared to 10% in 2004. This improvement is

ascribed, at least in part, to the success of the mines’

peer educator programme, which produced 265 new

peer trainers during 2005. Some 3,200 patients are

currently enrolled in treatment programmes and there

are 934 who are currently on anti-retroviral therapy.

More than 80% of patients who have been part of a

treatment programme have returned to work.

Shareholders will be aware of the announcement in

October 2005 by Anglo American plc and confirmed

in a subsequent statement in February this year that

it intended to reduce its shareholding in AngloGold

Ashanti, retaining a significant shareholding in the

medium term, in order to give this group greater

flexibility to pursue its strategic agenda. This agenda

is focused on improving the efficiency of existing

operations, seeking new orebodies in under-explored

gold regions of the world and seeking value-adding

merger and acquisition opportunities. The group’s

growth strategy is particularly crucial at a time in the

gold industry when the search for new gold

production and access to additional ounces is

paramount for all producers, as witnessed in the

recent further consolidation in the gold industry.

Despite this growth imperative, however, AngloGold

Ashanti will not pursue the acquisition of ounces at

the expense of shareholder value.

In this regard, our participation in the Boddington

Expansion Project in Western Australia has received

the approval of the board. Boddington, on a 100%

basis, has project resources of 24.5 million ounces of

gold and 1,040kt of copper, with reserves of

17.1 million ounces of gold and 658kt of copper. In

respect of our 33.33% interest, we are looking at a

current project life of more than 15 years with gold

production of approximately 330,000 ounces per

year and at a projected real cash cost of $209 per

ounce for the first five years.

Looking ahead to the rest of 2006, we are

expecting a modest production decline to between

5.9 million ounces and 6.1 million ounces, partly as

a consequence of reduced production at Bibiani in

Ghana and Savuka in South Africa. However,

production is forecast to increase by six to eight

per cent in 2007, as new projects, expansion

programmes and anticipated grade improvements

begin to have their expected effects.

We are pleased to welcome Reginald Bannerman

who has joined the board recently. A Ghanaian

lawyer who has spent more than 48 years in law

practice, Reginald has a wealth of experience from

which we can benefit.

Finally, we must note that Kelvin Williams retires

from the board in May this year, after a long and

distinguished career with AngloGold Ashanti and

the Anglo American group of companies. Kelvin is

widely regarded as a global authority on the gold

market and gold hedging. His contribution to the

company and the group is appreciated and will be

missed. Kelvin’s hedging responsibilities will be

assumed by Mark Lynam, the AngloGold Ashanti

treasurer, and his marketing activities by Thero

Setiloane, who is presently also the chairman of

Rand Refinery.

Russell Edey

Bobby Godsell

Chairman

Chief executive officer

28 February 2006

LETTER FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER

Corporate profile

ANGLOGOLD ASHANTI AT A GLANCE

AngloGold Ashanti, one of the world’s leading

gold mining companies, has 21 operations in

10 countries on four continents. Its portfolio

includes long-life, relatively low-cost assets and

differing orebody types in key gold-producing

regions around the globe. Activities range from

deep-level hard-rock mining to open-pit mining,

and include exploration, both brownfields and

greenfields as well as research and development.

AngloGold Ashanti was established in April 2004

following the business combination of AngloGold

Limited, a South African gold mining company, and

Ashanti Goldfields Company Limited, a Ghanaian

gold mining company. The business combination of

two of Africa’s leading gold mining companies was in

line with the group’s strategy of achieving geographic

and orebody diversity, and resulted in an increased

portfolio of shallow, low-cost surface mines.

Countries in which AngloGold Ashanti has

operations are: South Africa, Argentina, Australia,

Brazil, Ghana, Guinea, Mali, Namibia, Tanzania

and the United States.

In 2005, total gold production increased by 6% to

6.2 million ounces, of which 2.7 million ounces

(43%) came from deep-level hard-rock operations

in South Africa and the balance of 3.5 million

ounces (57%) from the shallower and surface

operations.

The group conducts extensive exploration

activities in countries as diverse as the United

States (Alaska) in North America, Colombia in

South America, the Democratic Republic of

Congo (DRC) in Africa, and Mongolia, Russia and

China in Asia.

ANGLOGOLD ASHANTI AT A GLANCE –

CORPORATE PROFILE

Corporate highlights

•

Production of 6.2 million ounces of gold in 2005

– an increase of 6% on production in 2004

•

Capital expenditure of $722 million, primarily

in South Africa, at Mponeng and TauTona

and on the development of Moab Khotsong,

at Obuasi in Ghana, at AngloGold Ashanti

Mineração in Brazil, Geita in Tanzania and at

the Australian operation, Sunrise Dam

•

As at 31 December 2005, Proved and

Probable Ore Reserves of 63 million ounces

and total Mineral Resources inclusive of Ore

Reserves of 176 million ounces

•

More than 60,000 people, including

contractors, employed around the globe

Shareholder information

With its headquarters in Johannesburg, South

Africa, AngloGold Ashanti has its primary listing in

Johannesburg on the JSE (ANG). It is also listed

on the following securities exchanges: New York

(AU), London (AGD), Australia (AGG) and Ghana

(AGA) as well as Euronext Paris (VA) and Euronext

Brussels (ANG).

PERFORMANCE REVIEW

for the year ended 31 December

Attributable

production (000 oz)

Gold income

($m)

Capital expenditure

($m)

REST OF AFRICA

USA

SOUTH AMERICA

AUSTRALIA

SOUTH AFRICA

PERFORMANCE REVIEW

for the year ended 31 December

Annual production

(000oz)

•

The operations here are divided into two regions, West Wits and Vaal River, which together have seven

mines, namely Great Noligwa, Kopanang, Moab Khotsong, Mponeng, Savuka, Tau Lekoa and TauTona.

•

As at 31 December 2005, Ore Reserves for these operations totalled 26.8 million ounces of gold –

42% of group reserves.

•

Combined, these mines employed some 42,500 people and produced 2,676,000 ounces of gold in 2005,

equivalent to 43% of total group output.

•

The South African operations contributed $230 million – 49% – to group adjusted gross profit.

•

Capital expenditure for the year totalled $347 million.

•

This region includes the mining operations in Ghana (Obuasi, Bibiani, Iduapriem), Guinea (Siguiri), Mali

(Morila, Sadiola, Yatela), Namibia (Navachab) and Tanzania (Geita).

•

As at 31 December 2005, Ore Reserves for all these operations totalled 23.2 million ounces of gold –

37% of group reserves.

•

Combined, these mines employed some 16,200 people and produced 2,148,000 ounces of gold in 2005,

equivalent to 35% of total group output.

•

The operations in Africa (outside of South Africa) contributed $74 million – 16% – to group adjusted gross

profit.

•

Capital expenditure for the year totalled $221 million.

•

The one mining operation here is Cripple Creek & Victor (CC&V) in the state of Colorado.

•

As at 31 December 2005, Ore Reserves at CC&V totalled 3.3 million ounces of gold – 5% of group

reserves.

•

This operation employed some 390 people and produced 330,000 ounces of gold in 2005, equivalent to

5% of total group output.

•

This operation contributed $17 million – 5% – to group adjusted gross profit.

•

Capital expenditure for the year totalled $8 million.

•

The mining operations here are located in Brazil (AngloGold Ashanti Mineração and Serra Grande) and

Argentina (Cerro Vanguardia).

•

As at 31 December 2005, Ore Reserves in Brazil and Argentina totalled 4.2 million ounces of gold –

7% of group reserves.

•

Combined, these mines employed some 4,400 people and produced 557,000 ounces of gold in 2005,

equivalent to 9% of total group output.

•

The operations together contributed $118 million – 25% – to group adjusted gross profit.

•

Capital expenditure for the year totalled $100 million.

•

The mining operation here is Sunrise Dam in the state of Western Australia; another operation, Boddington

also in Western Australia, is currently on care and maintenance.

•

As at 31 December 2005, Ore Reserves totalled 5.6 million ounces of gold – 9% of group reserves.

•

Sunrise Dam employed some 375 people and produced 455,000 ounces of gold in 2005, equivalent to

8% of total group output.

•

This operation contributed $46 million – 10% – to group adjusted gross profit.

•

Capital expenditure, at both Sunrise Dam and Boddington for the year totalled $38 million.

OPERATIONS AT A GLANCE

for the year ended 31 December

Summary

Attributable

Total

adjusted gross

cash gross

cash costs

profit (loss)

(1)

($/oz)

($m)

Page

Operation

2005

2004

2003

2005

2004

2003

2005

2004

2003

number

South Africa

Vaal River

Great Noligwa

264

231 193 87

118 121 120

134 131 50

Kopanang

277

281 223 54

46 46 74

60 53 50

Tau Lekoa

410

370 263 (14)

(6) 15 9

10 25 51

Surface operations

287

250 200 16

19 20

Moab Khotsong

⁽²⁾

–

– – –

– –

West Wits

Mponeng

279

322 221 49

11 39 86

37 57 47

Savuka

430

455 411 (8)

(18) (21) (1)

(10) (20) 47

TauTona

256

245 171 44

58 100 95

92 107

Surface operations

–

– 255

–

– – –

– –

Argentina

Cerro Vanguardia (92.5%)

171

156 143 31

30 23 52

54 47 54

Australia

Sunrise Dam

269

260 228 46

62 29 78

88 52 55

Union Reefs

–

– 272

–

(1) 4 –

(1)

4 57

Brazil

AngloGold Ashanti
Mineração

169

133 141 48

45 37 61

58 49 58

Serra Grande (50%)

158

134 109 22

18 19 26

22 24 60

Ghana

Bibiani

⁽³⁾

305

251 –

(10)

(2) – 3

8 –

Iduapriem (85%)

⁽³⁾

348

303 – (2)

(5) – 9

4 –

Obuasi

⁽³⁾

345

305 –

(16)

(15) – 26

5 –

Guinea

Siguiri (85%)

⁽³⁾

301

443 –

(14) – 33

(13) – 66

Mali

Morila (40%)

191

184

108

Sadiola (38%)

265

242

210

Yatela (40%)

263

255

235

Namibia

Navachab

321

348 274

Tanzania

Geita

⁽⁴⁾

298

250 183

USA

Cripple Creek & Victor

230

220 199

Jerritt Canyon (70%)

⁽⁵⁾

–

– 270

–

– (5)

–

– 5

Zimbabwe

Freda-Rebecca

^{(3) (6)}

–

417 – –

(1)

–

(1)

Adjusted gross profit (loss) plus amortisation of tangible and intangible assets, less non-cash revenues.

(2)

All income and expenses will be capitalised until commercial production is reached.

(3)

Interest acquired 26 April 2004 with reporting from 1 May 2004.

(4)

50% holding to 26 April 2004 and 100% from this date.

(5)

Jerritt Canyon Joint Venture was sold effective 30 June 2003.

(6)

Freda-Rebecca was sold effective 1 September 2004.

OPERATIONS AT A GLANCE

for the year ended 31 December

Summary

Attributable

Average

Attributable

tonnes

grade

gold

treated/milled

recovered

production

(Mt)

(g/t)

(000oz)

Page

Operation

2005

2004

2003

2005

2004

2003

2005

2004

2003

number

South Africa

2,676

2,857

3,078

Vaal River

Great Noligwa

2.3

2.4 2.4

9.30

10.38 10.57 693

795 812 50

Kopanang

2.0

2.0 2.2

7.38

7.37 7.07 482

486 497 50

Tau Lekoa

2.1

2.4 2.4

3.96

3.87 4.24 265

293 322 51

Surface operations

5.8

6.1 5.9

0.51

0.60

0.61

119 114

Moab Khotsong

⁽¹⁾

–

– – –

– –

West Wits

Mponeng

1.7

1.7 1.7

9.15

8.14 8.96 512

438 499 47

Savuka

0.6

0.8 1.0

6.80

6.19 5.81 126

158 187 47

TauTona

1.6

1.6 1.7

9.62

10.88 12.09 502

568 646 47

Surface operations

–

– – –

– 0.88

–

– 1

Argentina

211

209

Cerro Vanguardia (92.5%)

0.9

0.9 0.9

7.70

7.60 7.15 211

211 209 54

Australia

455

410

432

Sunrise Dam

3.6

3.7 3.6

3.68

3.46 3.12 455

410 358 55

Union Reefs

⁽²⁾

–

– 2.0 –

– 1.12

–

– 74 57

Brazil

346

334

323

AngloGold Ashanti
Mineração

(3)

1.3

1.0 1.1

7.27

7.85 7.22 250

240 228 58

Serra Grande (50%)

0.4

0.4 0.4

7.93

7.80 7.88 96

94 95 60

Ghana

680

485

–

Bibiani

^{(4) (6)}

2.4

1.7 –

1.45

1.93 –

115

105 –

Iduapriem (85%)

^{(4) (6)}

3.2

2.2 –

1.71

1.72 –

174

125 –

Obuasi

(3) (6)

4.7

2.6 –

4.77

5.27 –

391

255 –

Guinea

246

–

Siguiri (85%)

^{(5) (6)}

5.8

2.6 –

1.21

1.10 –

246

83 –

Mali

528

475

577

Morila (40%)

1.5

1.4

1.3

5.41

4.44

7.56

262

204

318

Sadiola (38%)

1.9

2.0

1.9

2.73

2.77

168

174

172

Yatela (40%)

⁽⁷⁾

1.3

1.1

1.0

2.99

3.41

2.84

Namibia

Navachab

1.2

1.3 1.3

2.05

1.59

1.75

Tanzania

613

570

331

Geita

⁽⁸⁾

6.1

4.7 2.9

3.14

3.74

3.60

613

570

331

USA

330

329

390

Cripple Creek & Victor

⁽⁷⁾

19.2

18.2 17.1

0.62

0.61

0.67

330

329

283

Jerritt Canyon (70%)

⁽⁹⁾

–

– 0.5

–

– 7.15

–

– 107

Zimbabwe

–

Freda-Rebecca

^{(6) (10)}

–

0.1 – –

1.66

–

(1)

Attributable production at Moab Khotsong yielded 29,862 ounces which was capitalised against pre-production costs.

(2)

Union Reefs ceased production in February 2004.

(3)

The yield of AngloGold Ashanti Mineração and Obuasi represents underground operations.

(4)

The yield of Bibiani and Iduapriem represents open-pit operations.

(5)

The yield of Siguiri arises from the open pit operation in 2005 and the heap leach operation in 2004.

(6)

Interest acquired 26 April 2004 with reporting from 1 May 2004.

(7)

The yield of Yatela and Cripple Creek & Victor Joint Venture reflects recoverable gold placed/tonnes placed.

(8)

50% holding to 26 April 2004 and 100% from this date.

(9)

Jerritt Canyon Joint Venture was sold effective 30 June 2003.

(10)

Freda-Rebecca was sold effective 1 September 2004.

SUMMARISED GROUP FINANCIAL RESULTS

for the year ended 31 December

Financial results

Dollar million

2005

2004

(1)

2003

2002

2001

Income statement

Gold income

2,629

2,309 2,029 1,761 2,041

Cost of sales

(2,311)

(1,924)

(1,526)

(1,203)

(1,519)

Non-hedge derivative (loss) gain

⁽²⁾

(135)

(142)

119 92 (5)

Gross profit

183

243

622

650

517

Corporate administration and other expenses

(64)

(51)

(36)

(25)

(22)

Market development costs

(13)

(15)

(19)

(17)

(16)

Exploration costs

(45)

(44)

(38)

(28)

(26)

Amortisation of intangible assets

–

(31)

(29)

(28)

(29)

Other net operating expenses

(20)

(12)

(14)

(8)

(10)

Operating special items

(77)

12 (8)

(23)

Operating (loss) profit

(36)

102 478 521 415

Interest received

49 42 39 25

Exchange (loss) gain

(5)

4 (3) (4)

(2)

Fair value adjustment on option component of convertible bond

(32)

–

Finance costs and unwinding of decommissioning and
restoration obligations

(108)

(87)

(53)

(48)

(75)

Fair value (loss) gain on interest rate swaps

(1)

6 – –

Share of associates (loss) profit

(3)

–

(Loss) profit before taxation

(160)

97 472 512 364

Taxation

41 (142)

(165)

(111)

(Loss) profit after taxation from continuing operations

(124)

138

330 347 253

Discontinued operations
Loss for the year from discontinued operations

(36)

(11)

–

(Loss) profit for the year

(160)

127

330

347

253

Allocated as follows
Equity shareholders of the parent

(183)

108 312 332 245

Minority interest

19 18 15 8

(160)

127 330 347 253

Other financial data

Adjusted gross profit

⁽³⁾

469

441

559 638 527

Cash gross profit

⁽⁴⁾

954

793

791 883 747

Headline (loss) earnings

(98)

141

318 376 281

Adjusted headline earnings

200

271

282 368 286

Adjusted gross margin

27 35 26

Cash gross margin

38 48 37

EBITDA

⁽⁵⁾

818

700

667

802

684

EBITDA margin

32 44 33

Interest cover

⁽⁶⁾

times

13 17 9

(Loss) earnings per ordinary share (cents)

Basic

US cents

(69)

140 150 114

Diluted

US cents

(69)

139 149 114

Headline US

cents

(37)

143 169 131

Headline earnings adjusted for the effect
of unrealised non-hedge derivatives, fair
value gain (loss) on convertible bond
and interest rate swap

US cents

108

127 166 133

Dividends declared per ordinary share

US cents

101 146 87

Weighted average number of shares (million)

265

251

223 222 214

Issued shares at year-end (million)

265

264

223 223 215

(1)

2004 comparatives restated to comply with current year disclosures.

(2)

Refer to Non-GAAP disclosure note 3 on page 17.

(3)

Refer to Non-GAAP disclosure note 2 on page 17.

(4)

Refer to Non-GAAP disclosure note 6 on page 18.

(5)

Refer to Non-GAAP disclosure note 7 on page 19.

(6)

Refer to Non-GAAP disclosure note 8 on page 19.

SUMMARISED GROUP FINANCIAL RESULTS

for the year ended 31 December

Financial results

Dollar million

2005

2004

⁽¹⁾

2003

2002

2001

Balance sheet

Assets

Tangible and intangible assets

6,304

6,323

3,176 2,654 2,446

Cash and cash equivalents

209

289

505 413 191

Other assets

1,781

1,590

1,176 897 662

Total assets

8,294

8,202

4,857 3,964 3,299

Equity and liabilities

Shareholders equity and minority interests

2,673

3,209

1,681 1,483 1,147

Borrowings

1,894

1,605

1,158 926 987

Deferred taxation

1,159

1,356

598 402 286

Other liabilities

2,568

2,032

1,420 1,153 879

Total equity and liabilities

8,294

8,202

4,857 3,964 3,299

Other financial data

Equity

⁽²⁾

4,252

4,708

2,568 2,082 1,559

Net capital employed

⁽²⁾

5,996

6,082

3,274 2,635 2,385

Net debt

⁽³⁾

1,685

1,316

653 513 796

Net asset value – US cents per share

⁽⁴⁾

1,009

1,214

754 665

533

Net tangible asset value – US cents per share

⁽⁵⁾

858

1,049

569 497

352

Financial ratios

Return on equity

⁽⁶⁾

12 21

Return on net capital

⁽⁷⁾

11 17

Net debt to net capital employed

20 19

Net debt to equity

25 25

(1)

2004 comparatives restated to comply with current year disclosures.

(2)

Refer to Non-GAAP disclosure note 9 on page 19.

(3)

Refer to Non-GAAP disclosure note 10 on page 19.

(4)

Refer to Non-GAAP disclosure note 11 on page 20.

(5)

Refer to Non-GAAP disclosure note 12 on page 20.

(6)

Refer to Non-GAAP disclosure note 13 on page 20.

(7)

Refer to Non-GAAP disclosure note 14 on page 20.

SUMMARISED GROUP FINANCIAL RESULTS

for the year ended 31 December

Financial results

Dollar million

2005

2004

⁽¹⁾

2003

2002

2001

Cash flow statement

Cash flows from operating activities

Cash generated from operations

699

588

592 758 673

Cash utilised by discontinued operations

(31)

(2)

–

Environmental, rehabilitation and other net expenditure

(26)

(18)

(30) (14) (10)

Taxation paid

(30)

(34)

(102) (131) (111)

Net cash inflow from operating activities

612

534

460 613 552

Cash flows from investing activities

Capital expenditure

(722)

(585)

(363) (271) (298)

Net proceeds from acquisition and disposal of

mines and subsidiaries

(171)

10 51

109

Net proceeds from acquisition and disposal of investments

and other

(18)

(20)

61 117

Interest received

Net loans (repaid) advanced

(1)

(15) 12 39

Cash restricted for use

⁽²⁾

(6)

–

Utilised in hedge restructure

(69)

(123)

–

Net cash outflow from investing activities

(771)

(785)

(274) (59)

(128)

Cash flows from financing activities

Net proceeds from share issues

10 7 7

Net borrowings proceeds (repaid)

316

259

197 (114) (138)

Finance costs

(74)

(72)

(40)

(72)

Dividends paid

(169)

(198)

(314) (260) (167)

Proceeds from hedge restructure

–

Net cash inflow (outflow) from financing activities

(147) (407) (370)

Net (decrease) increase in cash and cash equivalents

(77)

(219)

39 147 54

Translation

(3)

53 75

(58)

Opening cash and cash equivalents

289

495

413 191 195

Closing cash and cash equivalents

209

289

505 413 191

Other financial data

Free cash flow

⁽³⁾

160

205

311

518

473

(1)

2004 comparatives restated to comply with current year disclosures.

(2)

Cash which is subject to legal or contractual restrictions on use.

(3)

Refer to Non-GAAP disclosure note 15 on page 20.

SUMMARISED GROUP OPERATING RESULTS

for the year ended 31 December

Operating results

2005

2004

⁽⁵⁾

2003

2002

2001

Operating results

Underground operations
Metric tonnes milled

000

13,806

13,554

13,047

13,426

17,954

Yield

g/t

7.31

7.50

8.03

8.27

8.20

Produced

oz 000

3,243

3,270

3,367

3,569

4,734

Productivity
g/employee

target

286

270

236

247

219

actual

257

254

228

238

214

Surface and dump reclamation
Metric tonnes treated

000

8,061

7,102

36,822

38,366

50,355

Yield

g/t

0.52

0.60

0.27

0.30

0.32

Produced

oz 000

136

138

320

365

514

Open-pit operations
Metric tonnes mined

000

168,904

135,171

125,529

97,030

51,667

Stripping ratio

⁽¹⁾

5.02

6.34

8.95

6.18

6.93

Metric tonnes treated

000

25,541

18,236

13,967

13,682

15,294

Yield

g/t

2.74

3.21

3.43

3.80

2.99

Produced

oz 000

2,246

1,883

1,540

1,673

1,469

Heap-leach operations
Metric tonnes mined

000

61,091

71,837

59,507

51,192

34,123

Metric tonnes placed

⁽²⁾

000

22,227

22,120

18,265

13,504

11,748

Stripping ratio

⁽¹⁾

1.97

2.08

2.59

2.63

1.73

Recoverable gold placed

⁽³⁾

18,401

18,534

14,782

14,228

10,668

Yield

⁽⁴⁾

g/t

0.83

0.84

0.81

1.05

0.91

Produced

oz 000

541

538

389

332

266

Total gold produced

oz 000

6,166

5,829

5,616

5,939

6,983

– South Africa

oz 000

2,676

2,857

3,281

3,412

4,670

– Argentina

oz 000

211

209

179

136

– Australia

oz 000

455

410

432

502

508

– Brazil

oz 000

346

334

323

299

305

– Ghana

oz 000

680

485

–

– Guinea

oz 000

246

–

– Mali

oz 000

528

475

577

710

508

– Namibia

oz 000

– Tanzania

oz 000

613

570

331

290

273

– USA

oz 000

330

329

390

462

496

– Zimbabwe

oz 000

–

Price received

$/oz sold

439

394

363

303

287

Total cash costs

$/oz produced

281

264

214

150

166

Total production costs

$/oz produced

374

332

263

197

205

Capital expenditure

722

585

449

337

382

Monthly average number of employees

63,993

65,400

55,439

54,042

70,380

LTIFR

6.75

6.56

8.83

8.86

10.55

FIFR

0.14

0.19

0.29

0.31

0.25

Rand/dollar average exchange rate

6.37

6.44

7.55

10.48

8.62

Rand/dollar closing exchange rate

6.35

5.65

6.67

8.58

11.96

Australian dollar/dollar average exchange rate

1.31

1.36

1.54

1.84

1.93

Australian dollar/dollar closing exchange rate

1.36

1.28

1.33

1.79

1.96

(1)

Stripping ratio = (total tonnes mined – ore tonnes mined)/ore tonnes mined.

(2)

Tonnes placed onto leach pad.

(3)

Recoverable gold placed into leach pad inventory.

(4)

Recoverable gold placed/tonnes placed.

(5)

2004 comparatives restated to comply with current year disclosures.

Non-GAAP disclosure

From time to time we may publicly disclose certain “non-GAAP financial measures” in the course of our financial presentations, earnings releases,
earnings conference calls and otherwise.

The group utilises certain non-GAAP performance measures and ratios in managing our business and may provide users of this financial information
with additional meaningful comparisons between current results and results in prior operating periods. Non-GAAP financial measures should be
viewed in addition to, and not as an alternative for, our reported operating results or cash flow from operations or any other measure of performance
prepared in accordance with GAAP. In addition, our presentation of these measures may not be comparable to similarly titled measures other
companies use.

Headline earnings adjusted for the effect of unrealised non-hedge

derivatives, fair value gain (loss) on convertible bond and interest

rate swap (adjusted headline earnings)

937

(723)

Headline (loss) earnings

(98)

141

1,147

1,900

Unrealised non-hedge derivative loss

286

198

(226)

(128)

Deferred tax on unrealised non-hedge derivatives (group note 13)

(21)

(40)

(160)

211

Fair value adjustment on option component of convertible bond

(27)

(10)

Fair value gain (loss) on interest rate swap

(2)

–

Deferred taxation on interest rate swap

–

Headline earnings adjusted for the effect of unrealised non-hedge

derivatives, fair value gain (loss) on convertible bond and interest

1,691

1,265

rate swaps

200

271

(1)

Non-hedge derivatives in the income statement comprise the
change in fair value of all non-hedge derivatives as follows:

– Open positions: The change in fair value from the previous reporting

date or date of recognition (if later) through to the current reporting
date; and

– Settled positions: The change in fair value from the previous

reporting date or date of recognition (if later) through to the date of
settlement.

Headline earnings adjusted for the effect of unrealised non-hedge
derivatives, fair value gains (loss) on convertible bond and interest rate
swaps are intended to illustrate earnings after adjusting for:

– The unrealised fair value change in contracts that are still open at the

reporting date, as well as, the unwinding of the historic marked-to-
market value of the positions settled in the period; and

– Investment in hedge restructure transaction: During the hedge

restructure in December 2004 and March 2005 quarters, $83m,
R475m and $69m, R415m in cash were injected respectively into the
hedge book in these quarters to increase the value of long-dated
contracts. The entire investment in short-dated derivatives (certain of
which have now matured) and investment in long-dated derivatives (all
of which have not yet matured), for the purposes of the adjustment to
earnings, will only be taken into account when the realised portion of
long-dated non-hedge derivatives are settled, and not when the short-
term contracts are settled.

– The unrealised fair value change on the option component of the

convertible bond amounting to $32m, R211m (2004: ($27m), (R160m)).

673

478

Cents per share

108

This calculation is based on adjusted headline earnings of $200m,
R1,265m (2004: $271m, R1,691m) and 264,635,634 (2004:
251,352,552) shares being the weighted average number of ordinary
shares in issue during the financial year.

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NON-GAAP DISCLOSURE

Gross profit adjusted for the effect of unrealised non-hedge
derivatives (adjusted gross profit)

Reconciliation of gross profit to gross profit adjusted for the effect of
unrealised non-hedge derivatives:

1,697 1,088

Gross

profit

183 243

1,147

1,900

Unrealised non-hedge derivatives loss

286

198

Gross profit adjusted for the effect of unrealised non-hedge

2,844 2,988

derivatives

(1)

469 441

(1)

Non-hedge derivatives in the income statement comprise the change
in fair value of all non-hedge derivatives as follows:

– Open positions: The change in fair value from the previous reporting

date or date of recognition (if later) through to the current reporting
date; and

– Settled positions: The change in fair value from the previous reporting

date or date of recognition (if later) through to the date of settlement.

Gross profit adjusted for the effect of unrealised non-hedge derivatives,
is intended to illustrate earnings after adjusting for:

– The unrealised fair value change in contracts that are still open at the

reporting date, as well as, the unwinding of the historic marked-to-
market value of the positions settled in the period; and

– Investment in hedge restructure transaction: During the hedge

restructure in the quarter ended 31 December 2004 and the quarter
ended 31 March 2005, $83m and $89m in cash was injected into the
hedge book in these quarters to increase the value of long-dated
contracts. The entire investment in short-dated derivatives (certain of
which have now matured) and investment in long-dated derivatives
(all of which have not yet matured), for the purposes of the adjustment
to earnings, will only be taken into account when the realised portion
of long-dated non-hedge derivatives is settled, and not when the
short-term contracts are settled.

Adjusted gross profit (loss) is analysed by origin as follows:

1,462

1,480

South Africa

230

228

202

203

Argentina

390

288

Australia

547

543

Brazil

(130)

(191)

Ghana

(29)

(22)

(93)

Guinea

(16)

306

443

Mali

Namibia

150

Tanzania

107

USA

(9)

–

Zimbabwe

–

(1)

(35)

(96)

Other

(16)

(6)

2,844

2,988

469

441

Non-hedge derivative loss is summarised as follows:

Group:

361

951

Realised non-hedge derivative gain

151

(1,147)

(1,900)

Unrealised non-hedge derivative loss

(286)

(198)

(786)

(949)

Non-hedge derivative loss per the income statement

(135)

(142)

Company:

381

379

Realised non-hedge derivative gain

(904)

(693)

Unrealised non-hedge derivative loss

(104)

(154)

(523)

(314)

Non-hedge derivative loss per the income statement

(42)

(93)

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

Price received

14,788

16,750

Gold income per income statement

2,629

2,309

(431)

(566)

Adjusted for minority interests

(89)

(67)

14,357

16,184

2,540

2,242

361

951

Realised non-hedge derivative gain

151

14,718

17,135

2,691

2,298

181,585

190,767

Attributable gold sold – kg/– oz (000)

6,133

5,838

81,051

89,819

Revenue price per unit – R/kg/– $/oz

439

394

Total costs

9,914

11,240

Total cash costs (group note 4)

1,768

1,549

(73)

(219)

Adjusted for minority interests and non-gold producing companies

(35)

(11)

Total cash costs adjusted for minority interests and non-gold

9,841

11,021

producing companies

1,733

1,538

168

Retrenchment costs (group note 4)

136

368

Rehabilitation and other non-cash costs (group note 4)

2,423

3,203

Amortisation of tangible assets (group note 4)

503

380

Amortisation of intangible assets (group note 4)

(91)

(102)

Adjusted for minority interests and non-gold producing companies

(16)

(14)

Total production costs adjusted for minority interests and non-gold

12,369

14,671

producing companies

2,305

1,934

181,311

191,783

Gold produced – kg/– oz (000)

6,166

5,829

54,276

57,465

Total cash cost per unit – R/kg/– $/oz

281

264

68,221

76,495

Total production cost per unit – R/kg/– $/oz

374

332

Cash gross profit

2,844

2,988

Gross profit adjusted for the effect of unrealised non-hedge derivatives

469

441

2,423

3,203

Amortisation of tangible assets (group note 4)

503

380

Amortisation of intangible assets (group note 4)

(183)

(130)

Non-cash revenues

(20)

(29)

5,092

6,074

954

793

Cash gross profit is analysed by origin as follows:

2,193

2,562

South Africa

399

342

370

354

Argentina

555

494

Australia

685

687

Brazil

108

107

128

249

Ghana

(81)

258

Guinea

(13)

503

732

Mali

115

110

Namibia

372

289

Tanzania

300

363

USA

–

Zimbabwe

–

(24)

Other

(3)

5,092

6,074

954

793

2004

2005

Figures in million

Notes

2005

2004

SA Rands

US Dollars

NON-GAAP DISCLOSURE

EBITDA

794

(320)

Operating (loss) profit per the income statement

(36)

102

2,423

3,203

Amortisation of tangible assets (group note 4)

503

380

Amortisation of intangible assets (group note 4)

300

Impairment of tangible assets (group note 15 and 17)

–

125

Impairment of intangible assets (group note 18)

–

200

–

Amortisation of goodwill (group note 18 and 19)

–

1,147

1,900

Unrealised non-hedge derivative loss (note 3 above)

286

198

(5)

Share of associates’ EBITDA (group note 9)

(1)

–

(88)

(40)

Profit on disposal of assets’ (group note 7)

(5)

(13)

–

Abandonment of assets at Malian operations (group note 7)

–

4,494

5,207

818

700

Interest cover

4,494

5,207

EBITDA

818

700

Finance costs and unwinding of decommissioning and restoration

563

690

obligations (group note 8)

108

102

Capitalised finance costs (group note 17)

630

792

124

Interest cover – times

Equity and net capital employed

17,790

16,584

Shareholders’ equity per balance sheet

2,614

3,151

Adjusted to exclude:

1,040

1,655

– Other comprehensive income (group note 29)

261

184

122

227

– Actuarial losses (group note 29)

18,952

18,466

2,911

3,357

7,653

7,353

Deferred tax (group note 34)

1,159

1,356

Adjusted to exclude:

(87)

1,015

– Deferred tax on derivatives and other comprehensive income

160

(16)

131

– Deferred tax on actuarial losses

26,581

26,965

Equity

4,252

4,708

327

374

Minorities (group note 30)

7,262

10,825

Borrowings – long-term portion (group note 31)

1,706

1,286

1,800

1,190

Borrowings – short-term portion (group note 31)

188

319

35,970

39,354

Capital employed

6,205

6,371

(1,630)

(1,328)

Cash and cash equivalents (group note 26)

(209)

(289)

34,340

38,026

Net capital employed

5,996

6,082

10. Net debt

7,262

10,825

Borrowings – long-term portion (group note 31)

1,706

1,286

1,800

1,190

Borrowings – short-term portion (group note 31)

188

319

9,062

12,015

Total borrowings

1,894

1,605

(1,630)

(1,328)

Cash and cash equivalents (group note 26)

(209)

(289)

7,432

10,687

Net debt

1,685

1,316

2004

2005

Figures in million

Notes

2005

2004

SA Rands

US Dollars

11. Net asset value – cents per share

18,117

16,958

Total equity per balance sheet

2,673

3,209

264

265

Number of ordinary shares in issue (group note 28)

265

264

6,850

6,401

Net asset value – cents per share

1,009

1,214

12. Net tangible asset value – cents per share

18,117

16,958

Total equity per balance sheet

2,673

3,209

2,458

(2,533)

Intangible assets (group note 18)

(399)

(435)

15,659

14,425

2,274

2,774

264

265

Number of ordinary shares in issue (group note 28)

265

264

5,921

5,445

Net tangible asset value – cents per share

858

1,049

13. Return on equity

Headline earnings adjusted for the effect of unrealised non-hedge

derivatives, fair value gain (loss) on convertible bond and interest

1,691

1,265

rate swap (note 1 above)

200

271

(67)

–

Adjusted for the timing of acquisitions

–

(10)

1,624

1,265

200

261

26,581

26,965

Equity

4,252

4,708

21,851

26,773

Average equity

4,480

3,638

Note – equity for 2003 amounted to $2,568m, R17,120m

Return on equity – %

14. Return on net capital

Headline earnings adjusted for the effect of unrealised non-hedge

derivatives, fair value gain (loss) on convertible bond and interest

1,691

1,265

rate swap (note 1 above)

200

271

(67)

–

Adjusted for the timing of acquisitions

–

(10)

1,624

1,265

200

261

Finance costs and unwinding of decommissioning and restoration

563

690

obligations (group note 8)

108

–

Adjusted for the timing of acquisitions

–

603

690

108

Headline earnings adjusted for the effect of unrealised non-hedge

derivatives, fair value gain (loss) on convertible bond and interest rate

2,227

1,955

swap and before finance costs adjusted for the timing of acquisitions

308

354

34,340

38,026

Net capital employed (note 9 above)

5,996

6,082

28,085

36,183

Average net capital employed

6,039

4,678

Note – Net capital employed for 2003 amounted to $3,274m, R21,830m

Return on net capital – %

15. Free cash flow

3,179

3,892

Net cash inflow from operating activities per cash flow

612

534

(2,119)

(2,879)

Stay-in-business capital expenditure per cash flow

(452)

(329)

1,060

1,013

160

205

2004

2005

Figures in million

Notes

2005

2004

SA Rands

US Dollars

NON-GAAP DISCLOSURE

ONE-YEAR FORECAST – 2006

Attributable gold

Total cash

Capital

produced

cost

expenditure

oz 000

$/oz

South Africa

2,457 – 2,555

293 – 305

307 – 319

Vaal River
Great Noligwa

651 – 677

258 – 268

47 – 49

Kopanang

457 – 475

294 – 306

36 – 38

Tau Lekoa

207 – 215

382 – 398

Surface Operations

93 – 97

325 – 339

11 – 12

Moab Khotsong

48 – 50

654 – 680

82 – 85

West Wits
Mponeng

495 – 515

278 – 290

46 – 48

Savuka

14 – 15

613 – 639

–

TauTona

491 – 511

267 – 277

73 – 75

Argentina

207 – 215

184 – 192

14 – 16

Cerro Vanguardia

207 – 215

181 – 189

14 – 16

Australia

451 – 469

276 – 288

108 – 112

Sunrise Dam

451 – 469

268 – 278

27 – 28

Boddington

(1)

–

81 – 84

Brazil

327 – 341

179 – 187

110 – 115

AngloGold Ashanti Mineraç ˜ao

234 – 244

164 – 170

98 – 103

Serra Grande

93 – 97

179 – 187

Ghana

647 – 672

313 – 325

103 – 108

Bibiani

54 – 56

297 – 309

Iduapriem

185 – 193

302 – 314

14 – 15

Obuasi

407 – 423

319 – 332

88 – 92

Guinea

250 – 260

308 – 320

21 – 22

Siguiri

250 – 260

308 – 320

21 – 22

Mali

518 – 539

269 – 279

Morila – Attributable 40%

215 – 223

274 – 286

Sadiola – Attributable 38%

185 – 193

302 – 314

Yatela – Attributable 40%

118 – 122

249 – 259

–

Namibia

81 – 85

301 – 313

Navachab

81 – 85

301 – 313

Tanzania

562 – 585

291 – 303

86 – 89

Geita

562 – 585

297 – 309

86 – 89

North America

323 – 337

244 – 254

Cripple Creek & Victor

323 – 337

238 – 248

Other

–

AngloGold Ashanti

5,823 – 6,058

285 – 293

786 – 818

(1)

Subject to approval by the partners of the Boddington Joint Venture project.

Rates of exchange:
R/$

6.50:1

A$/$

0.76:1

BRL/$

2.40:1

ARS/$

2.96:1

Dollar million

Notes

(1)

2005

2004

Value added

Gold income

2 and 3

2,629

2,309

Less: Purchases of goods and services in order to operate mines
and produce refined metal, including market development costs
net of other income

(1,089)

(873)

Value-added by operations

1,540

1,436

Fair value (loss) gain on interest rate swaps and option component of
convertible bond

(2)

(33)

Exchange (loss) gain

–

(5)

–

Profit on disposal of assets and subsidiaries

–

Income from investments and interest received

3 and 9

Government
Deferred taxation

118

107

Utilised in the group
Retained income

278

Total value added

100

1,925

100

1,678

Value distributed

Employees
Salaries, wages and other benefits

877

823

Government
– Current taxation

Providers of capital
– Finance costs and unwinding of the decommissioning obligation

108

– Dividends declared

148

– Minorities

Other
– Impairment of tangible assets

–

– Loss from discontinued operations

– Non-hedge derivatives

135

142

Total value distributed

1,420

1,297

Re-invested in the group

– Amortisation and depreciation

4, 17 and 18

505

381

100

1,925

100

1,678

(1)

Refer to the notes on the group financial statements on pages 132 to 219.

GROUP VALUE-ADDED STATEMENT

for the year ended 31 December

as at 28 February 2006

Directors and executive management

Non-executive directors

Mr R P Edey (63)

FCA

Chairman

Russell Edey was appointed to the AngloGold board

in April 1998 and as deputy chairman in December

2000. In May 2002 he was appointed chairman

when Bobby Godsell relinquished this office. Based

in the United Kingdom, he is deputy chairman of

N M Rothschild Corporate Finance and a director of

a number of other companies.

Dr T J Motlatsi (54)

Hon DSoc Sc (Lesotho)

Deputy Chairman

James Motlatsi was appointed to the AngloGold

board in April 1998 and as deputy chairman in May

2002 upon Russell Edey being appointed chairman.

He has been associated with the South African

mining industry since 1970, and is a past president

of the National Union of Mineworkers. He is chief

executive officer of TEBA Limited.

Mr F B Arisman (61)

MSc (Finance)

Frank Arisman was appointed to the AngloGold

board in April 1998. He resides in New York and

retired, after 32 years of service, from JP Morgan

Chase, where he held the position of managing

director.

Mr R E Bannerman (71)

MA (Oxon) LLM (Yale)

Reginald Bannerman has been in law practice since

1958 and is currently the principal partner at Messrs

Bruce-Lyle, Bannerman & Thompson Attorneys in

Ghana. He is a member of the General Legal Council

of Ghana and a member of the board of the Valco

Trust Fund, the largest privately run trust in Ghana. A

former lecturer in law at the Ahmadu Bello University

in Nigeria, Reginald was also formerly the mayor of

Accra, the capital city of Ghana. He was appointed

to the board in February 2006.

Mrs E le R Bradley (67)

BSc, MSc

Elisabeth Bradley was appointed to the AngloGold

board in April 1998. She is non-executive chairman

of Wesco Investments Limited and Toyota South

Africa (Proprietary) Limited, and a director of a

number of other companies. She is deputy

chairman of the South African Institute of

International Affairs.

Mr C B Brayshaw (70)

CA (SA), FCA

Colin Brayshaw was appointed to the AngloGold

board in April 1998. He is a retired managing partner

and chairman of Deloitte & Touche and is a non-

executive director of a number of companies

including Anglo Platinum and Datatec.

Dr S E Jonah KBE (56)

Hon DSc (Exeter), MSc (Mineral Production

Management)

President

Sam Jonah worked in various positions, including

underground, with Ashanti Goldfields and was

appointed to the position of CEO of Ashanti in 1986.

He has been decorated with many awards and

honours and in 2003 an Honorary Knighthood was

conferred on him by Her Majesty, Queen Elizabeth II of

Great Britain, in recognition of his exceptional

achievements as an African businessman. Sam Jonah

was appointed as an executive director to the board of

AngloGold Ashanti in 2004, a position he relinquished

in 2005 but retained his appointment as a non-

executive director.

Mr R Médori (48)

Doctorate Economics, Grad (Fin)

René Médori was appointed to the AngloGold

Ashanti board in August 2005. He is the finance

director of Anglo American plc.

Mr W A Nairn (61)

BSc (Min. Eng)

Bill Nairn has been a member of the AngloGold

board since January 2000. He was re-appointed to

the board in May 2001, having previously been

alternate director to Tony Trahar. He was group

technical director of Anglo American plc, prior to his

retirement in 2004.

Mr S R Thompson (46)

MA (Geology)

Simon Thompson is a director of Anglo American plc

and chairman of the Base Metals Division, the

Industrial Minerals Division and the Exploration

Division. Simon was appointed to the AngloGold

Ashanti board in 2004.

Mr A J Trahar (56)

BCom, CA (SA)

Tony Trahar was appointed to the AngloGold board

in October 2000. He is chief executive officer of

Anglo American plc.

Non-executive directors (continued)

Mr P L Zim (45)

MCom

Lazarus Zim is chief executive officer of Anglo

American South Africa Limited and is chairman of

Anglo Operations Limited and serves on a number of

boards in the Anglo American group, including Anglo

Platinum. Lazarus was appointed to the AngloGold

Ashanti board in April 2004.

Executive directors

Mr R M Godsell (53)

BA, MA

Chief Executive Officer

Bobby Godsell was appointed to the AngloGold

board as chief executive officer in April 1998 and as

chairman in December 2000. He relinquished his role

as chairman of AngloGold in May 2002. He has

29 years of service with companies associated with

the mining industry, and has served as a non-

executive director of Anglo American plc since March

1999. He is also the immediate past chairman of the

World Gold Council.

Mr R Carvalho Silva (54)

BAcc, BCorp Admin

Chief Operating Officer – International

Roberto Carvalho Silva joined the Anglo American

group in Brazil in 1973 and was appointed president

and CEO of AngloGold South America in January

1999. He became executive officer, South America

for AngloGold in 2000 and was appointed to the

board of AngloGold Ashanti in May 2005 in his

current capacity.

Mr N F Nicolau (46)

B Tech (Min. Eng), MBA

Chief Operating Officer – Africa

Neville Nicolau was appointed the executive officer

responsible for AngloGold’s South Africa region in

November 2001 and was appointed to the board of

AngloGold Ashanti in May 2005 in his current

capacity. He has 27 years of experience in the mining

industry.

Mr S Venkatakrishnan (Venkat) (40)

BCom, ACA (ICAI)

Executive Director: Finance (Chief Financial Officer)

Venkat was the finance director of Ashanti Goldfields

Company Limited from 2000 until the merger with

AngloGold in 2004. Prior to joining Ashanti, Venkat

was a director in the Reorganisation Services Division

of Deloitte & Touche in London. He was appointed to

the board of AngloGold Ashanti in August 2005.

Mr K H Williams (57)

BA (Hons)

Executive Director: Marketing

Kelvin Williams was appointed marketing director of

AngloGold in April 1998. He has 30 years of service

in the gold mining industry. He is a past chairman of

Rand Refinery and a director of the World Gold

Council.

Alternate directors

Mr D D Barber (53)

FCA, AMP (Harvard)

David Barber was appointed alternate director to

Julian Ogilvie Thompson in April 2002 and following

the latter’s retirement from the board in April 2004, he

was appointed as alternate to Lazarus Zim. He

is finance director of Anglo American South Africa

Limited.

Mr A H Calver (58)

BSc (Hons) Engineering, MDP (UNISA), PMD

(Harvard)

Harry Calver was appointed alternate director to Bill

Nairn in May 2001. He is head of engineering at

Anglo American plc.

Mr P G Whitcutt (40)

BCom (Hons), CA (SA), MBA

Peter Whitcutt who is head of finance at Anglo

American plc, has been an alternate director since

October 2001, first to Tony Lea, and then to René

Médori who replaced the former on the board of

AngloGold Ashanti.

Executive officers

Dr C E Carter (43)

BA (Hons) (UCT), DPhil (Oxford), EDP (Northwest

University – Kelogg School of Management)

Executive Officer – Investor Relations

Charles Carter joined Anglo American in 1991 and

moved to the Gold and Uranium Division in 1996. In

May 2005, he was appointed an executive officer,

with responsibility for overseeing the company’s

global investor relations programme.

DIRECTORS AND EXECUTIVE MANAGEMENT

as at 28 February 2006

DIRECTORS AND EXECUTIVE MANAGEMENT

as at 28 February 2006

Executive officers (continued)

Mr D H Diering (54)

BSc, AMP

Executive Officer – Business Planning: Africa

Dave Diering joined the Anglo American Gold and

Uranium Division in 1975 and worked at several

South African operations as well as for Zimbabwe

Nickel Corporation until 2001, when he joined

AngloGold as head of mining and mineral resources.

In 2005 he was appointed an executive officer.

Mr R N Duffy (42)

BCom, MBA

Executive Officer – Business Development

Richard Duffy joined Anglo American in 1987 and in

1998 was appointed executive officer and managing

secretary of AngloGold. In November 2000 he was

appointed head of business planning and in 2004

assumed responsibility for all new business

opportunities globally. In April 2005 this role was

expanded to include greenfields exploration. He was

appointed to the executive committee in August

2005.

Mrs D Earp (44)

BCom, BAcc, CA (SA)

Executive Officer – Finance

Dawn Earp joined AngloGold in July 2000 from Anglo

American, where she was vice president, Central

Finance. Dawn was appointed an executive officer in

May 2004.

Mr D C Ewigleben (52)

BSc, DJur

Executive Officer – Law, Safety, Health and

Environment

Don Ewigleben joined the group in 2000 as vice

president, general counsel and corporate secretary

of AngloGold Ashanti's North American operations.

In 2003 he was promoted to the position of president

and chief administrative officer for North America, a

position which was changed in 2005 to CEO. He

was appointed an executive officer in January 2006.

Prior to joining the group he served in various

executive positions for Echo Bay Mines (Canada)

and AMAX Gold (US). He also held legal, safety

and environmental positions with AMAX Coal

Industries (US).

Mr B W Guenther (53)

BS (Min. Eng)

Executive Officer – International Technical

Ben Guenther joined AngloGold as senior vice

president general manager of Jerritt Canyon mine in

Nevada, USA and in 2000 was seconded to

AngloGold’s corporate office in Johannesburg as

head of mining. In 2001, he assumed some

responsibilities for safety and health, as well as

heading up the corporate technical group. He was

appointed an executive officer in May 2004 and was

appointed to his current position in December 2005.

Ms H H Hickey (52)

BCompt (Hons), CA(SA)

Executive Officer – Head of Risk

Hester Hickey joined AngloGold in 1999 as Group

Internal Audit Manager. She was appointed an

executive officer in November 2005.

Mr R L Lazare (49)

BA, HED (University of Free State), DPLR (UNISA),

SMP (Henley Management College)

Executive Officer – Africa: Underground Mining

Robbie Lazare joined Anglo American Gold and

Uranium Division in 1982 where he worked in a

variety of management posts until 1999 when he

was appointed general manager of TauTona mine. In

December 2004 he was appointed an executive

officer with responsibility for South African

operations. He took up his current position in July

2005.

Mr S J Lenahan (50)

BSoc Sc, MSc

Executive Officer – Corporate Affairs

Steve Lenahan has been working in the mining industry

since 1978 when he started his career at De Beers. He

was appointed an executive officer of AngloGold in

1998, responsible for investor relations and assumed

responsibility for corporate affairs in 2001.

Mr M P Lynam (44)

BEng (Mech)

Executive Officer – Treasury

Mark Lynam joined the Anglo American group in

1983 and has been involved in the hedging and

treasury area since 1990. In 1998 he joined

AngloGold as treasurer and was appointed an

executive officer in May 2004.

Executive officers (continued)

Mr F R L Neethling (53)

BSc (Mech. Eng)

Executive Officer – Africa: Open-Pit Mining

Fritz Neethling joined the Anglo American group in

1992 and in 1999 joined AngloGold as general

manager of the Ergo operation. He was appointed an

executive officer in July 2005.

Mr D M A Owiredu (48)

BSc (Hons) (Mech. Eng), MBA

Deputy Chief Operating Officer – Africa

Daniel Owiredu joined Ashanti Goldfields Company

Limited in 1984 and served in various engineering

capacities. He has also served as managing director

of the Obuasi, Bibiani and Siguiri mines. In March

2004, he was appointed Chief Operating Officer –

West Africa following the Ashanti/AngloGold merger

until his new position as Deputy Chief Operating

Officer – Africa in October 2005.

Mr P W Rowe (56)

BSc (Chem. Eng)

Executive Officer – Corporate Technical Group

Peter Rowe joined AngloGold Ashanti in June 2004

as head of AngloGold Ashanti Australia. Following

20 years with Anglo American and De Beers, he

moved to Australia in the early 1990s where he held

a number of senior managerial positions including

project director of the Fimiston expansion, general

manager of the Boddington Gold Mine and

managing director and CEO of Bulong Nickel. He

was appointed executive officer with responsibility for

the corporate technical group in January 2006.

Ms Y Z Simelane (40)

BA LLB, FILPA, MAP

Executive Officer and Managing Secretary

Yedwa Simelane joined AngloGold in November

2000 from the Mineworkers’ Provident Fund where

she was the senior manager of the Fund. She was

appointed an executive officer in May 2004.

Mr T M L Setiloane (46)

FAE, BSc (Mech Eng)

Executive Officer – Marketing

Thero Setiloane joined AngloGold in May 2003 from

Real Africa Holdings, where he was an executive

director. He is the chairman of Rand Refinery and

was appointed an executive officer and a member of

AngloGold Ashanti’s executive committee in

February 2006.

Mr N W Unwin (53)

Executive Officer – Human Resources and

Information Technology

Nigel Unwin has many years experience in the field of

human resources. He was appointed an executive

officer in 1999.

Executive officers

Company secretary

Mr C R Bull (59)

BCom

Chris Bull has been employed by the Anglo American

group since 1965 in various company secretarial

positions. He was appointed company secretary of

AngloGold in 1998 and is responsible for ensuring

compliance with statutory and corporate governance

requirements and the regulations of the stock

exchanges on which AngloGold Ashanti is listed.

DIRECTORS AND EXECUTIVE MANAGEMENT

as at 28 February 2006

Group information

Current profile

AngloGold Ashanti, headquartered in Johannesburg,

South Africa, is a global gold company with a

portfolio of long-life, relatively low-cost assets and

differing orebody types in key gold producing

regions. The company’s 21 operations are located

in 10 countries (Argentina, Australia, Brazil,

Ghana, Guinea, Mali, Namibia, South Africa,

Tanzania and the United States of America), and

are supported by extensive exploration activities.

The combined Proved and Probable Ore

Reserves of the group amounted to 63.3 million

ounces as at 31 December 2005.

The primary listing of the company's ordinary

shares is on the JSE Limited (JSE) in South Africa.

Its ordinary shares are also listed on stock

exchanges in London, Paris and Ghana, as well

as being quoted in Brussels in the form of

International Depositary Receipts (IDRs), in New

York in the form of American Depositary Shares

(ADSs), in Australia, in the form of Clearing House

Electronic Subregister System Depositary

Interests (CDIs) and in Ghana, in the form of

Ghanaian Depositary Shares (GhDSs).

AngloGold Ashanti Limited (Registration number

1944/017354/06) was incorporated in the

Republic of South Africa in 1944 under the name

of Vaal Reefs Exploration and Mining Company

Limited and operates under the South African

Companies Act 61 of 1973, as amended.

History and development of the
company

AngloGold Ashanti, as it conducts business

today, was formed on 26 April 2004 following the

business combination of AngloGold Limited

(AngloGold) with Ashanti Goldfields Company

Limited (Ashanti), which was incorporated in

Ghana on 19 August 1974.

AngloGold Limited

AngloGold was formed in June 1998 through the

consolidation of the gold interests of Anglo

American Corporation of South Africa Limited

(AAC) and its associated companies into a single,

focused, independent, gold company. Vaal Reefs

Exploration and Mining Company Limited (Vaal

Reefs), the vehicle for the consolidation, changed

its name to AngloGold Limited and increased its

authorised share capital, effective 30 March 1998.

AngloGold then acquired, in share-for-share

exchanges in terms of South African schemes of

arrangement and following shareholder approval,

all the issued share capital of East Rand Gold

and Uranium Company Limited; Eastvaal Gold

Holdings Limited; Southvaal Holdings Limited;

Free State Consolidated Gold Mines Limited;

Elandsrand Gold Mining Company Limited;

H.J. Joel Gold Mining Company Limited and

Western Deep Levels Limited. A total of

51,038,968 ordinary shares were issued to AAC

and 66,010,118 ordinary shares to other

shareholders in exchange for their shares in

these companies.

In private transactions with AAC and minority

shareholders, other share interests were acquired

in Driefontein Consolidated Limited (17%);

Anmercosa Mining (West Africa) Limited (100%);

Western Ultra Deep Levels Limited (89%); Eastern

Gold Holdings Limited (52%); Erongo Mining

and Exploration Company Limited (70%); and

other sundry share interests. In exchange,

25,734,446 ordinary shares were issued to AAC

and 957,920 ordinary shares to minority

shareholders. AngloGold also acquired gold

exploration and mining rights from AAC and other

companies: 1,623,080 ordinary shares were

issued to AAC and 4,210,412 ordinary shares to

other companies in exchange. In addition,

AngloGold acquired from AAC and JCI all the

rights under service agreements relating to the

companies listed above – from AAC in exchange

for 6,834,872 ordinary shares, and from JCI for

R62 million ($11 million).

The consolidation was approved by the required

majorities of the shareholders of AngloGold and

the participating companies and became

effective on 1 January 1998 for accounting

purposes.

Subsequent to its formation:

•

AngloGold purchased Minorco’s gold

interests in North and South America with

effect from 31 March 1999;

•

with effect from 31 December 1999,

AngloGold acquired Acacia Resources in

Australia. A total of 18,020,776 AngloGold

shares were issued in the transaction;

•

with effect from 3 July 2000, AngloGold

acquired a 40% interest in the Morila mine in

Mali from Randgold Resources Limited;

•

on 15 December 2000, AngloGold acquired

a 50% interest in the Geita mine in Tanzania

from Ashanti Goldfields Company Limited.

Following the business combination, the

remaining 50% interest was acquired;

•

in 2000, in support of its market development

initiatives, AngloGold acquired a 25%

interest in OroAfrica, South Africa’s largest

manufacturer of gold jewellery and a 33%

holding in Gold Avenue, an e-commerce

business in gold. Gold Avenue continued to

sell gold jewellery by catalogue and website

until early 2004, after which it was wound up;

•

on 9 April 2001, the sale to Harmony Gold

Mining Company Limited of the Elandsrand

and Deelkraal mines for R872 million

($109 million) became unconditional;

•

in January 1998, the No. 2 Shaft Vaal River

Operations was tributed to African Rainbow

Minerals (currently Harmony Gold Mining

Company Limited) (ARM) on the basis that

40% of all revenue, costs and capital

expenditure would be attributable to ARM,

with the balance to AngloGold. On 1 July

2001, AngloGold disposed of its interests in

No. 2 Shaft Vaal River Operations to ARM for

the sum of R10 million ($1 million);

•

on 5 September 2001, AngloGold

announced that it was to make a take-over

offer for Normandy Mining Limited

(Normandy), Australia’s largest listed gold

mining company. This did not come to

fruition. Arising from the offer, 6,869,602

AngloGold ordinary shares were issued. This

excluded 143,630 AngloGold ordinary

shares issued under the top-up facility to

Normandy shareholders. The Normandy

shares acquired were sold on the market on

January 2002 realising a total of

$158 million;

•

on 1 January 2002, the sale of AngloGold’s

Free State assets to ARM and Harmony,

through a jointly-owned company, for a

net

consideration of R2,523 million

($229 million) (including tax payable by

AngloGold and net of contractual

obligations), became effective;

•

during July 2002, AngloGold acquired an

additional 46.25% of the equity, as well as the

total loan assignment, of Cerro Vanguardia SA

from Pérez Companc International SA, for a

net consideration of $97 million, increasing its

interest in Cerro Vanguardia to 92.5%;

•

AngloGold disposed of its wholly owned

subsidiary, Stone and Allied Industries

(O.F.S.) Limited, a stone-crushing company,

to a joint venture of that company’s

existing management and a group of black

entrepreneurs, with effect from 1 October

2002, for a consideration of R5 million;

•

on 23 May 2003, AngloGold announced that it

had signed an agreement to sell its wholly

owned Amapari project to Mineração Pedra

Branca do Amapari for a total consideration of

$18 million. The effective date of the transaction

was 19 May 2003. The Amapari project is

located in the State of Amapá, in northern

Brazil. Since acquiring the property as part of

the Minorco transaction, AngloGold sought to

prove up additional reserve ounces so as to

achieve a size and life that would justify the

management resources needed to run it

effectively. This was not achieved and

AngloGold, on receiving an offer from a

purchaser who could constructively turn this

orebody to account, agreed to sell;

GROUP INFORMATION

•

on 6 June 2003, AngloGold announced that it

had finalised the sale of its 49% stake in the

Gawler Craton Joint Venture, including the

Tunkillia project located in South Australia to

Helix Resources Limited. Consideration for the

sale comprised cash of $500,000

(A$750,000), 1.25 million fully paid Helix

shares issued at A$0.20 per share and

1.25 million Helix options exercisable at

A$0.25 per option before 30 November 2005

with an additional payment of $335,000

(A$500,000) deferred to the delineation of a

mineable resource of 350,000 ounces. Helix’s

proposed acquisition of AngloGold’s rights to

the Tarcoola project, 60 kilometres to the

south, was excluded from the final agreement.

This resulted in a restructure of the original

agreement terms as announced on 8 April

2003. On 23 April 2005, the company

received a further 416,667 fully paid Helix

shares and 37,281 Helix options following a

rights issue. The company did not exercise its

rights in terms of the Helix options which

expired on 30 November 2005;

•

on 2 July 2003, AngloGold announced that it

had concluded the sale of its interest in the

Jerritt Canyon Joint Venture to Queenstake

Resources USA Inc., effective 30 June 2003.

Queenstake paid the Jerritt Canyon Joint

Venture partners, AngloGold and Meridian

Gold, $1.5 million in cash and 32 million

shares issued by a subsidiary, Queenstake

Resources Limited, with $6 million in deferred

payments and $4 million in future royalties.

Queenstake accepted full closure and

rehabilitation liabilities. The shares acquired by

AngloGold in this transaction, were sold in

November 2003;

•

on 8 July 2003, AngloGold disposed of its

entire investment of 8,348,600 shares held

in East African Gold Mines Limited for

a consideration of $25 million and in

the

second half of 2003 AngloGold

disposed of 952,481 shares in Randgold

Resources Limited for a consideration of

$23 million;

•

on 18 September 2003, AngloGold and Gold

Fields Limited jointly announced that

agreement had been reached on the sale by

Gold Fields of a portion of the Driefontein

mining area in South Africa to AngloGold for

a cash consideration of R315 million

($48 million); and

•

on 20 January 2004, AngloGold announced

that it had received a cash payment of

A$4 million ($3 million) and 25 million fully

paid ordinary shares from Tanami Gold NL in

Australia, as consideration for Tanami Gold’s

purchase of the Western Tanami project. This

followed an initial payment of A$0.3 million

($0.2 million) made on 24 November 2003,

when the Heads of Agreement was signed by

the companies. In addition, a further 2 million

fully paid ordinary shares were received from

Tanami Gold in respect of a rights issue in

June 2004. During the period, 10 October to

18 October 2005, AngloGold Ashanti

Australia reduced its shareholding in Tanami

Gold to 5%, with the sale of 8 million fully

paid ordinary shares for a cash consideration

of A$1.3 million ($1 million) and in February

2006, disposed of the entire investment in

Tanami Gold with the sale of 19 million

shares for a cash consideration of

A$3.9 million ($3 million).

Ashanti Goldfields Company Limited

Ashanti Goldfields Corporation Limited was

founded in 1897 to develop a mining concession

in the area of the operations at Obuasi. In 1969,

Ashanti became a wholly owned subsidiary of

Lonrho Plc (later Lonmin Plc, a UK-listed

company which at that time had interests in

mining, hotels and general trade in Africa).

The government of Ghana acquired 20% of Ashanti

from Lonmin in exchange for the extension of

Ashanti’s mining lease over its concession area. In

1972, the government of Ghana formed a

Ghanaian company to take over the assets,

business and functions formerly carried out by

Ashanti, holding 55% of the outstanding shares.

Further developments include:

•

in 1994, as part of its divestiture policy, the

government of Ghana sold part of its holding

at which time the company was listed in

Ghana;

•

in 1996, Ashanti acquired companies holding

interests in the Ayanfuri, Bibiani, Iduapriem,

Siguiri and Freda-Rebecca properties as well

as an interest in what was then the Geita

exploration concession in Tanzania. This was

followed by the acquisition in 1998 of SAMAX

Gold Inc., the principal asset of which was

the other part of the interest in the Geita

exploration concession adjacent to Ashanti’s

existing licence area;

•

in 1999/2000, the Geita mine was developed

and, in 2000, AngloGold acquired a 50%

interest; and

•

in 2000, Ashanti acquired a 90% interest in the

Teberebie mine, adjacent to the Iduapriem mine.

From the end of 1999 to June 2002, commencing

with a sharp rise in the price of gold which led initially

to a liquidity crisis, Ashanti engaged in a process of

financial restructuring with its banks, hedge

counterparties and noteholders. In June 2002, the

company completed a financial restructuring which

involved entering into a new enlarged revolving credit

facility of $200 million: raising approximately

$42 million from the early exercise of 70% of its

warrants (which were previously issued to banks and

hedge counterparties and which were exchangeable

for shares); reaching agreement with hedge

counterparties for continued margin-free trading; and

raising $75 million through the issue to its largest

shareholder, Lonmin, of mandatorily exchangeable

notes (MENs).

Business combination between AngloGold

and Ashanti

The business combination between AngloGold

and Ashanti Goldfields Company Limited which

was originally announced on 16 May 2003 was

completed with effect from Monday, 26 April

2004, following the confirmation by the High

Court in Ghana on Friday, 23 April 2004, of the

scheme of arrangements, in terms of which

AngloGold acquired the entire issued share

capital of Ashanti. In terms of the business

combination, Ashanti shareholders received

0.29 ordinary shares or 0.29 ADSs of AngloGold

for every Ashanti share or Ashanti GDS (Global

Depositary Security) held. Each ADS represents

one ordinary AngloGold share. Ashanti became a

private company and a wholly owned subsidiary

of AngloGold, and AngloGold changed its name

to AngloGold Ashanti Limited on 26 April 2004,

the effective date of the transaction.

GROUP INFORMATION

Developments since April 2004

Developments by the AngloGold Ashanti group

since April 2004 include:

•

on 1 July 2004, AngloGold Ashanti

announced that it had entered into an

agreement with Trans-Siberian Gold plc (TSG)

for the acquisition of a 29.9% stake in the

company through an equity investment of

approximately £18 million ($32 million) in two

subscriptions for ordinary shares. The first

tranche of ordinary shares of 17.5% was

acquired during July 2004. TSG is listed on

the London Stock Exchange’s Alternative

Investment Market (AIM). This first move into

Russia allows AngloGold Ashanti the

opportunity of establishing a meaningful

interest in a company with Russian assets and

activities, thereby allowing AngloGold Ashanti

to gain exposure to, and familiarity with, the

operating and business environment in

Russia, as well as being able to establish a

business within this prospective New Frontier.

On 23 December 2004, it was announced that

the second subscription had been delayed to

15 April 2005, while on 18 April 2005, the

second subscription date was extended by a

further two weeks to 29 April 2005. On 28

April 2005, the company announced that

agreement had been reached with TSG on

revised terms for the second subscription of

shares in TSG, and a revised subscription

price of £1.30 per share, compared to £1.494

per share agreed between the parties on

30 June 2004. The revised terms of the

subscription were approved by TSG

shareholders on 27 May 2005 and AngloGold

Ashanti’s 17.5% equity interest in TSG

increased to 29.9% on 31 May 2005, the date

on which the second subscription for

6,131,585 ordinary shares in TSG for an

aggregate consideration of £8 million

($15 million) was completed. The company’s

aggregate shareholding in TSG at

31 December 2005 was 12,263,170 ordinary

shares (29.9% interest held);

•

on 5 August 2004, AngloGold Ashanti

announced the sale of its Union Reefs assets

to the Burnside Joint Venture, comprising

subsidiaries of Northern Gold NL (50%) and

Harmony Gold Mining Company Limited

(50%), for a total consideration of A$4 million

($2 million). The Burnside Joint Venture is

responsible for all future obligations

associated with the assets, including

remaining site rehabilitation and reclamation;

•

in a joint announcement on 10 September

2004, AngloGold Ashanti confirmed its

agreement to sell its entire interest in Ashanti

Goldfields Zimbabwe Limited to Mwana

Africa Holdings (Proprietary) Limited for a

deferred consideration of $2 million. The sole

operating asset of Ashanti Goldfields

Zimbabwe Limited is the Freda-Rebecca

Gold Mine. The sale was effective on

1 September 2004;

•

on 11 October 2004, AngloGold Ashanti

announced that it had signed an agreement

with Philippines explorer Red 5 Limited to

subscribe for a 12.3% stake in the expanded

issued capital of Red 5 Limited for a cash

consideration of A$5 million ($4 million). The

placement is being used to fund the

exploration activities along strike from current

Mineral Resources at the Siana project, and to

test the nearby prophyry gold-copper targets

in the Surigao region of the Republic of the

Philippines. On 26 August 2005, AngloGold

Ashanti subscribed for additional shares in

Red 5 Limited for a cash consideration of

A$0.8 million ($0.6 million), thereby increasing

its holding to 14.1%. For a period of two years

commencing in October 2004, AngloGold

Ashanti has the right to enter into joint venture

arrangements on Red 5’s tenements

(excluding the Siana project) with the potential

to earn up to a 67.5% interest in areas of

interest through further investment and

exploration in these joint venture areas. The

company has not yet entered into such joint

venture arrangements;

•

in 2004, Queenstake approached the Jerritt

Canyon Joint Venture partners, AngloGold

and Meridian Gold, about the possibility of

monetising all or at least a majority of the

$6 million in deferred payments and

$4 million in future royalties, payable in the

concluded sale of AngloGold’s interest in the

Jerritt Canyon Joint Venture to Queenstake

Resources USA Inc., effective 30 June 2003.

Based on the agreement reached between

the parties, on 25 August 2004, AngloGold

Ashanti was paid approximately $7 million for

its portion of the deferred payments and

future royalties, thereby monetising all

outstanding obligations, except for a minor

potential royalty interest that AngloGold

Ashanti retained;

•

agreement was reached to sell AngloGold

Ashanti’s 40% equity interest in Tameng Mining

and Exploration (Pty) Limited of South Africa

(Tameng) to Mahube Mining (Pty) Limited for a

cash consideration of R20 million ($3 million).

Tameng owns certain mineral rights to platinum

group metals (PGMs) on the farm Locatie Van

M’Phatlele KS 457, on the northern limb of the

Bushveld Complex in the Limpopo Province in

South Africa. The sale was effective on

1 September 2004;

•

AngloGold Ashanti completed a substantial

restructure of its hedge book in January 2005,

details of which are available in the December

2004 quarterly report which is available on the

corporate website;

•

on 26 January 2005, AngloGold Ashanti

signed a three-year revolving credit facility for

$700 million. For full details, see note 31 on

page 174;

•

on 29 April 2005, AngloGold Ashanti

announced the conditional sale of

exploration assets in the Laverton area in

Australia, comprising the Sickle royalty of

$30 per ounce, the Child Harold prospect,

various 100% AngloGold Ashanti Australia-

owned interests including the Lord Byron

and Fish projects as well as its interests in

the Jubilee, Black Swan and Jasper Hills

joint ventures to Crescent Gold Limited, for a

total consideration of A$4 million ($3 million).

A$0.3 million ($0.2 million) was payable on

the execution of a binding sale and purchase

agreement, A$1 million ($0.8 million) is

payable in Crescent Gold shares and

A$3 million ($2 million) is payable in cash, on

or before 15 December 2006. Following this

announcement, a decision was taken to

accept a cash consideration of A$1 million in

lieu of shares in Crescent Gold Limited;

•

AngloGold Ashanti's board approved, on

26 January 2005, a $121 million expansion

project at the company's Cuiabá mine in

south-eastern Brazil. The project will

focus on the deepening of the mine to

access the Serrotinho and Fonte Grande

GROUP INFORMATION

orebodies located below the existing mine,

which accounts for 60% of the total Mineral

Resource at Cuiabá. It is anticipated

that production will increase from the

current 190,000 ounces per annum to

250,000 ounces per annum at an estimated

cost of $169 per ounce over the life of the

project and would extend the life of mine

profile by six years to 2019;

•

on 19 July 2005, Aflease Gold and Uranium

Resources Limited (Aflease) announced that

it had purchased from AngloGold Ashanti, its

Weltevreden mine in exchange for Aflease

shares in a transaction valued at R75 million

($11 million). On 19 December 2005, Aflease

was acquired by sxr Uranium One

Incorporated (formerly Southern Cross

Incorporated);

•

the Director-General of Minerals and Energy

notified AngloGold Ashanti in August 2005

that application for the new order mining

rights in terms of the South African Mineral

Resources and Petroleum Development Act

had been granted. AngloGold Ashanti is of

the conviction that the new mineral rights

dispensation seeks to begin to remedy the

economic legacy of apartheid by ensuring

that economic opportunity becomes

available to increasing numbers of South

African citizens, while simultaneously seeking

to maintain local and international economic

confidence, and to promote economic

growth;

•

on 11 August 2005, AngloGold Ashanti

announced that it had disposed of its

La Rescatada project to Arunani SAC, a

local

Peruvian corporation, for a total

consideration of $12.5 million, with an option

to repurchase 60% of the project should

economically viable reserves in excess of

2 million ounces be identified within three

years. The exploration project is located

approximately 800 kilometres south-east of

the city of Lima in Peru; and

•

on 27 February 2006, AngloGold Ashanti

announced that it had signed an agreement

with China explorer, Dynasty Gold Corporation,

to acquire an effective stake of 8.7% in that

company, through the purchase of 5.75 million

Dynasty units at a price of C$0.40 each. Each

unit will consist of one common share and one-

half common share purchase warrant,

exercisable at a price of C$0.60 per unit for two

years.

In each of the above matters, the investor public

was duly informed through the prescribed routes

by the stock exchanges on which the company

is listed.

GROUP INFORMATION

Products

AngloGold Ashanti’s main product is gold. A small

portion of its revenue is derived from the sales of

silver, uranium oxide and sulphuric acid.

AngloGold Ashanti sells its products on world

markets.

Gold market

The gold market is relatively liquid compared with

many other commodity markets. Physical

demand for gold is primarily for fabrication

purposes, including jewellery (which accounts for

almost 80% of fabricated demand), electronics,

dentistry, decorations, medals and official coins.

In addition, central banks, financial institutions

and private individuals buy, sell and hold gold

bullion as an investment and as a store of value.

The use of gold as a store of value (a

consequence of the tendency of gold to retain its

value in relative terms against basic goods, and

particularly in times of inflation and monetary

crisis) and the large quantities of gold held for this

purpose in relation to annual mine production

have meant that, historically, the potential total

supply of gold is far greater than demand at any

one time. Thus, while current supply and demand

play some part in determining the price of gold,

this does not occur to the same extent with other

commodities. Instead, the gold price has from

time to time been significantly affected by macro-

economic factors such as expectations of

inflation, interest rate changes, exchange rate

changes, changes in reserve policy by central

banks, and by global or regional political and

economic events. In times of price inflation and

currency devaluation, gold is often bought as a

store of value, leading to increased purchases

and support for the price of gold.

Changes in exchange rates against the dollar

particularly affect levels of demand for gold in

non-US economies. In South East Asia, for

example, during the mid-1990s strong local

currencies encouraged robust gold demand due

to low real gold prices in local currencies. In

contrast, when South East Asian currencies fell

sharply against the dollar in 1997, the local

currency values of gold increased proportionally,

and wholesale selling of the metal ensued in the

region. Recoveries in Asian currencies since 1999

have resulted in a decline in gold prices in these

currencies, which in turn has led to a rise in gold

demand in Asian countries to previous levels. In

the investment market, a strong dollar during the

1990s had a negative effect on investment

demand for gold in developed economies. Since

2001, the weakness in the dollar has been an

encouragement to investors to buy gold.

While political and economic crises can have

either a positive or negative impact on gold, this is

not inevitable. As a recent example of this, in

1998, despite negative sentiment caused by the

Russian financial crisis and ensuing corrections in

the capital markets worldwide, the price of gold

remained stable. By contrast, more recent

political events in the Middle East have helped to

drive the gold price higher.

The market in 2005

New levels of investor and speculator interest in

gold during 2005 led to the gold price reaching

25-year highs. Despite a lull at the beginning of

2005, investor interest in gold resumed and

significantly exceeded that of 2004. This was

most marked towards the end of the year, the

fourth year of the current rally in the gold price.

The average gold price for the year was $445 per

ounce, an increase of 9% on 2004. In January

2006, the gold price reached a 25-year high of

$567 per ounce.

The weaker dollar in the first half of 2005

continued to influence the dollar gold price.

However, this relationship did not apply during the

second half of the year when the gold price

strengthened in spite of a stronger dollar. A

significant feature of the year was the break in the

four-year link between the gold price and the

dollar/euro exchange rate, and a material increase

in the gold price in non-US dollar terms for the

first time in the current gold price cycle. After

averaging

a325 per ounce for the past four years,

the gold price reached a high of

a457 per ounce

on 12 December.

The resurgence in the dollar also contributed to a

shift in the local currency and the rand weakened

against the US dollar for most of the year. At its

weakest point of R6.96/$1, the South African

currency had lost some 19% against the dollar

since the beginning of January 2005, when the

exchange rate reached R5.64/$1. The rand

however strengthened towards the end of the

year and recouped most of its intra-year losses,

averaging R6.35/$1 for the year, compared to an

average of R6.42/$1 for 2004. The relative

weakness of the rand during the second half of

the year, together with the strong spot price of

gold in US dollars, resulted in sharply higher rand

gold prices which peaked at R111,000 per

BUSINESS OVERVIEW

The gold market

BUSINESS OVERVIEW –

THE GOLD MARKET

kilogram in December, providing some relief for

South African gold producers.

Several circumstances outside of currency

markets encouraged interest in gold during the

year. Probably the most direct influence on

sentiment came from the oil market, where

particularly supply disruptions caused by

hurricane damage in the USA pushed the spot

price of benchmark West Texas Intermediate up

to a record price of $70/barrel in early September.

Speculation over the likely impact of increases in

the oil price on inflation and on global economic

growth led to increased buying interest in gold,

and there was a correlation between increases in

the gold price and the spot price of oil during the

second half of the year.

Although expectations of rising inflation rates are

often used to justify higher gold prices, there is

little conclusive evidence of an increased threat of

inflation at present, notwithstanding base metal,

commodity and energy price increases in recent

years. While headline inflation in the USA rose

towards the end of the year, this was due largely

to the impact of higher retail pump prices for

gasoline, and annual core inflation in the

US remains a little over 2%. Most recently, core

inflation in Europe remains below 2%.

Nevertheless, the impact of higher oil prices has

introduced a sense of uncertainty about the

health of the global economy, which continues to

encourage interest in gold among both investors

and speculators.

Speculative demand

To measure the extent of investor interest in the

metal, the open position on the New York Comex,

and the holdings of the gold exchange traded

funds (ETFs) should be considered together. The

Comex continued to be the most direct predictor

of gold spot price movement for much of the year,

with the spot price of metal tracking changes in

the buying interest on that exchange until the final

quarter of the year. The net open position on the

Comex peaked in October 2005 at a little over the

previous record level set in April 2004 of over

22 million ounces net long (685 tonnes net long),

and this sustained long position on Comex has

helped to keep the gold price firm and rising. To

the net open Comex interest should be added

aggregate investor holdings in gold ETFs, which

by January 2006 amounted to some 13 million

ounces or 400 tonnes of gold. These ETF

holdings were accumulated mostly during the

past 12 months, and predominantly from the

launch of the New York Stock Exchange’s

streetTRACKS fund in late 2004. The combined

Comex and ETF holdings today exceed 30 million

ounces, or almost 950 tonnes of gold in net

investment and speculative positions in

developed markets.

Demand

Physical offtake of gold continued to improve

during the year. Demand fell back under the

weight of the rising gold price during the final

quarter of 2005, but overall figures for fabrication

offtake for the year remained positive.

Consumption of gold in jewellery increased by 5%

for the year, largely on the back of strong growth

in India and the Middle East. In India, general

economic growth has translated to better

demand on a wide front and during the first half of

2005, that market was able to adjust to higher

and more volatile gold prices, although Indian

offtake was to fall sharply during the final quarter

of 2005. Improved offtake in the Middle East was

sustained throughout the year, primarily on the

back of increased oil revenue in that region. There

was growth in demand for gold jewellery in both

Turkey and China too. As has been the case for

some time, however, the offtake of gold jewellery

in the developed markets of the United States,

Europe and Japan remained disappointing.

Net bullion supply on the market was higher,

driven particularly by a year-on-year increase

of over 40% in official sales of gold, to 663

tonnes for 2005, and significantly reduced de-

hedging by gold producers. The market returned

to an over-supply position during the second half

of 2005.

With investment demand still positive for gold, the

final balance of supply and demand in the gold

market will remain of secondary importance.

Investor and speculation purchases on the margin

will continue to be the price-determining force in

the gold market. However, in the longer term it is

important that physical demand is healthy given

the ability of the physical market to provide

offtake and floor price support at times when

investor or speculator interest weakens.

Official sector

The most significant issue for gold in the official

sector in 2005 was the proposal made by certain

members of the International Monetary Fund (IMF)

during 2005, to sell outright a portion of the gold

reserves of the IMF to provide debt relief for

heavily indebted poor countries. While this

proposal contributed to a measure of negative

sentiment in the gold market at the time, the

announcement by the G8 that such a debt relief

programme would not be funded by either a

revaluation or sale of the gold reserves of the IMF,

removed the uncertainty that IMF sales might cap

the gold market in the future.

Hedging

As at 31 December 2005, the net delta hedge

position of AngloGold Ashanti was 10.84 million

ounces or 337 tonnes, valued at the spot price of

gold on that date of $517 per ounce. The marked-

to-market value of the hedge position at this date

was negative $1.941 billion. The increase in the size

and negative value of the hedge in the latter half

of the year was due mainly to the increase in the

spot price of gold against which the hedge is

valued, which was 19% higher at the end of 2005

than the spot price of $435 per ounce at which

the hedge had been valued at 31 December

2004.

Marketing channels

Gold produced by AngloGold Ashanti’s mining

operations is processed to saleable form at various

precious metals refineries. Once refined to a saleable

product – either a large bar weighing approximately

12.5 kilograms and containing 99.5% gold, or

smaller bars weighing 1.0 kilograms or less with a

gold content of 99.5% and above – the metal could

be sold by the refineries to the bullion banks or

directly by the company to the bullion banks, and the

proceeds are paid to the group.

Bullion banks are registered commercial banks that

deal in gold. They participate in the gold market in

buying and selling gold and distribute physical gold

bullion bought from mining companies and

refineries to physical offtake markets worldwide.

Bullion banks hold consignment stocks in all major

physical markets such as India or South East Asia

and finance such consignment stocks from the

margins charged by them to physical buyers, over

and above the amounts paid by such banks to

mining companies for the gold.

Where forward sales contracts exist against which

AngloGold Ashanti delivers the physical product,

the same channel of the refinery is used. In this

case, the refinery does not sell the metal on the

group’s behalf, but instead delivers the finished

gold bars to the bullion bank with which the

group’s forward contract is held. The physical

delivery to the counterparty bank of the appropriate

amount of gold fulfils AngloGold Ashanti’s

obligations under the forward contract, and

AngloGold Ashanti is paid for this gold by the relevant

bullion bank, at the price fixed under the forward

contract, rather than at the spot price of the day.

Gold market development

The challenge for marketing gold is significant.

This is especially so given that demand for gold

jewellery in many developed markets has declined

materially in the past five years, with gold jewellery

sales losing ground to other luxury consumer

goods in developed markets.

AngloGold Ashanti is committed to growing the

market for gold. The group’s marketing programme

aims to increase the desirability of its product, to

sustain and grow demand, and to support the

deregulation of the market in key economies.

During 2005, AngloGold Ashanti spent some

$13 million on gold marketing initiatives, of which

66% was spent through the World Gold Council

(WGC). Gold marketing expenditure by AngloGold

Ashanti in 2004 and 2003 amounted to

$15 million and $19 million, respectively.

Independently of its support for the WGC, AngloGold

Ashanti is active in a number of other marketing

projects that support gold. It remains the only gold

group in the world to have committed this level of

resources to the marketing of the metal it produces.

Downstream initiatives have included GoldAvenue, an

internet venture selling gold jewellery, established

between AngloGold Ashanti, JP Morgan Chase and

Pamp MKS of Geneva in 2000. This venture

continued to sell gold jewellery by catalogue

and website until early 2004, after which it was

wound up.

The United States remains an important focus

market for AngloGold Ashanti's marketing initiatives,

due to its value and influence on gold jewellery

retailing trends. However, AngloGold Ashanti now

includes in its international marketing initiatives the

emerging markets of India and China. In both of

these markets, gold jewellery purchases have a

traditional or cultural motivation. Among modern

urban consumers in India and China, however,

gold jewellery is increasingly competing for

consumer spend with other luxury goods.

Initiatives in India and China therefore focus on

the modernisation of retail channels for gold

jewellery consumption and on the development of a

modern product offer which can sustain and grow

consumer interest in gold jewellery purchases for

non-traditional reasons.

BUSINESS OVERVIEW –

THE GOLD MARKET

BUSINESS OVERVIEW –

THE GOLD MARKET

AngloGold Ashanti holds a 25% stake in

OroAfrica, the largest manufacturer of gold

jewellery in South Africa, as an investment in the

downstream beneficiation of gold in South Africa.

AngloGold Ashanti and OroAfrica have co-

operated in a number of projects, including

OroAfrica’s development and launch of an African

gold jewellery brand. An important strategic step

has been the establishment of a Jewellery Design

Centre at OroAfrica at a cost of $250,000. The

purpose of the Centre is to generate new gold

jewellery designs, and to improve product

standards through technology, design and

innovation. The Centre has been used during the

past year to develop a new range of gold jewellery

with an African theme. The Design Centre was

commissioned by the South African Parliament in

2003 to manage the fabrication of the new

Parliamentary mace to celebrate the tenth year of

democracy in South Africa. The mace was

successfully completed and presented to

Parliament in 2003.

Also in the area of design innovation, AngloGold

Ashanti’s Riches of Africa Gold Jewellery Design

Competition was established in 1998 to

showcase South African jewellery designers, to

enhance jewellery manufacturing technical skills in

South Africa, and to support the local gold jewellery

industry. Training workshops for competition

entrants are held each year, while the award-

winning works are exhibited and used in fashion

shows and other events both locally and abroad.

The 2005 competition attracted a record total of

559 entrants and a record number of student and

professional jewellers attended training workshops

held by AngloGold Ashanti in Johannesburg,

Cape Town and Durban.

A biennial gold jewellery design competition in

Brazil, the Designers Forum, was launched by the

group in 2002. It was the first such competition

in that country. The competition generated

unprecedented interest in 2004, with a high

quality of design and craftsmanship and some

650 projects involved. From these, 33 pieces

were selected for the collection.

The Gold of Africa Museum was inaugurated in

2001 in Cape Town with the permanent

endowment of the Barbier Mueller collection of

West African gold objects purchased by the

company in 1998. The museum also serves as a

training facility in the jewellery industry in Cape

Town. The museum continues to attract a growing

number of visitors, and to provide special visits for

school groups in the Cape Town area.

Other South African projects in 2005 include the

launch of a scheme to provide cost-effective

financing for South African gold jewellery

manufacturers, in partnership with Gold Fields

Limited, BAE Systems/Saab (through defence

contract offset obligations) and Standard Bank.

The scheme aims to lower the cost of financing

gold working inventory to manufacturers,

thereby enabling them to compete more

effectively in international markets. In 2005,

AngloGold Ashanti also worked in conjunction

with the Department of Trade and Industry (DTI),

the Industrial Development Corporation of

South Africa (IDC) and the WGC to produce a

publication on the gold industry in South Africa

entitled 'Gold in South Africa: Mining, Refining,

Fabrication and Trade'. This publication is

intended to provide a source of reference on the

gold industry in South Africa and is the first

attempt to collate data on the South African

gold industry in all of its various activities.

AngloGold Ashanti and Mintek, South Africa’s

national metallurgical research organisation,

launched Project AuTEK in 2002 to research and

develop industrial applications for gold. Project

AuTEK has developed a gold-based catalyst for

the oxidation of carbon monoxide at ambient

temperatures. Mintek has carried out pilot-scale

catalyst production tests. Negotiations for the

commercial production of the catalyst have

commenced.

An important feature in many of AngloGold

Ashanti’s marketing projects has been the

beneficiation of gold, particularly in South Africa.

AngloGold Ashanti’s commitment to adding value

to gold extends beyond mining and aims to

contribute towards the upliftment of people and

the sustainability of communities.

AngloGold Ashanti remains a sponsor of the

Atteridgeville Jewellery Project, established in 2000

by the Vukani Ubuntu Community Development

Project to create opportunities in the jewellery

industry in South Africa for the previously

disadvantaged through training and development. In

2004, the company also sponsored the expansion of

the Soweto Jewellery School to enable it to double

its intake of students from 2005.

AngloGold Ashanti, with the exception of the former

Ashanti mines in Ghana, reported a sound operating

performance for the 2005 financial year; this did not,

however, translate into an improved financial

performance.

Results for the year

•

Average dollar gold spot price at $445 per

ounce, 9% higher than 2004.

•

2005 received gold price increased by 11%

to $439 per ounce.

•

Adjusted gross profit up by 6% to $469 million.

•

Adjusted headline earnings decreased by

26% to $200 million or 76 US cents per

share, from $271 million or 108 US cents per

share in 2004.

•

A final dividend of 62 South African cents per

share or approximately 10 US cents per share

was declared, resulting in a total dividend for

2005 of 232 South African cents or

approximately 36 US cents per share.

•

Return on net capital employed decreased

from 8% to 5%.

•

Return on equity decreased from 7% to 4%.

•

Gold production from continuing operations

was 6% higher at 6.2 million ounces, largely

owing to increased production from the

Australia, Ghana and Guinea operations. Their

contribution was partially offset, however, by

planned reductions in production at the South

African operations.

•

Total cash costs increased by 6% to

$281 per ounce, largely owing to the impact

of stronger operating currencies, inflation

and lower grades mined in the year.

•

Ore Reserves down 20% to 63 million ounces

and Mineral Resources 19% lower at 176 million

ounces as at the end of December 2005.

Exchange rates

The average exchange rate for the year ended

31 December 2005 was R6.37:$1 compared with

R6.44:$1 in 2004. The average value of the

Australian dollar versus the US dollar for 2005 was

A$1:$0.76 compared with A$1:$0.74 in 2004.

Gold production

The increase in production of 6% to 6.2 million

ounces was largely a result of a full year’s attributable

production from the former Ashanti mines in Ghana

and Guinea, and higher production at Sunrise Dam,

Morila, Mponeng and Navachab. This increase was

partially offset by reduced production from the

underground operations in South Africa.

Production from the South African operations

decreased by 6% to 2.68 million ounces mainly as

a result of the following:

•

a drop in the grade and volume mined at

TauTona due to a reduction in face advance

as a result of geological complexity;

•

declines at Tau Lekoa offset by improved

grades;

•

a decrease in the volumes mined at Savuka

as the mine nears closure; and

•

the lower grades mined at Great Noligwa.

•

these were offset by improvements at Mponeng

where the recovered grade increased by 12%

and production by 17%.

Australia’s production was 45,000 ounces higher

at 455,000 ounces as a result of a 1% decrease

in tonnes treated and a 12% improvement in

grade to 3.9g/t.

Production in Brazil increased by 12,000 ounces.

At AngloGold Ashanti Mineração production was

4% higher at 250,000 ounces as a result of the

increased tonnages treated, despite this being of

a lower grade. Serra Grande production was 2%

higher at 96,000 ounces, a result of increased

higher grade tonnage.

The Ghanaian operations produced 680,000 ounces

for the year compared with 485,000 ounces for

the eight months to 31 December 2004. Although

production at Obuasi totalled 391,000 ounces,

this was hampered by a 9% decline in grade

mined to 4.77g/t. Also exacerbating the situation

were equipment failures, shortages and adverse

weather conditions. Production of 115,000 ounces

at Bibiani was also constrained by a 22% decline

in grade to 1.45g/t. Mining activities here are

nearly complete. At Iduapriem, attributable

production was 174,000 ounces at a yield of

1.71g/t.

At Siguiri in Guinea, attributable gold production

increased to 246,000 ounces for the year compared

with 83,000 ounces for the eight months to

December 2004. This increase was mainly due to

the processing of the ore through the new

CIP plant.

Financial review

BUSINESS OVERVIEW –

FINANCIAL REVIEW

Gold production in Mali increased by 11% or

53,000 ounces to an attributable

528,000 ounces. This was mostly a result of a

28% increase in attributable production at Morila

to 262,000 ounces, with the average yield

increasing by 22% to 5.41g/t. Attributable gold

production at Yatela rose to 98,000 ounces

although grade declined to 2.99g/t. At Sadiola,

attributable production declined by 3% to

168,000 ounces as milled tonnages decreased

and grade declined.

In Namibia, Navachab produced 81,000 ounces,

which was 21% up on 2004 with an increase in

yield of 29% to 2.05g/t. This increase occurred

despite the equipment failures experienced during

the year.

At Geita in Tanzania, gold production increased

by 8% to 613,000 ounces, largely as a result of

the increased tonnage treated although grade

declined to 3.14g/t. The move to owner-mining

was completed during July 2005.

Gold production at Cripple Creek & Victor in the

United States remained steady at 330,000

ounces, mainly owing to the slightly higher

recoveries obtained from the increased tonnages

processed.

Income statement

Gold income

The average spot price of $445 per ounce for the

year was 9% higher than that in 2004. However,

in rand terms, the average spot price was 7%

higher at R91,154 per kilogram. The received gold

price increased by $45 per ounce or 11% to

$439 per ounce.

Gold income increased by 14%, rising from

$2,309 million in 2004 to $2,629 million in 2005.

This increase was primarily a result of the

improvement in the received price of gold and the

increase in ounces sold.

Cost of sales

Cost of sales rose by 20% from $1,924 million in

2004 to $2,311 million in 2005. This was largely

attributable to currency and inflationary effects,

with the latter resulting from increased mining

contractor costs and higher diesel, fuel, transport

and electricity prices.

Cost of sales changes can be further analysed as

follows:

•

total cash costs increased to $1,768 million

in 2005 from $1,549 million in 2004 (or from

$264 per ounce to $281 per ounce), despite

the 6% increase in production to 6.2 million

ounces in 2005. Of the $17 per ounce

increase in total cash costs, $4 per ounce

related to stronger operating currencies

relative to the dollar, $19 per ounce to

inflation, and $8 per ounce to lower grades.

Cost savings initiatives helped to negate

this by $14 per ounce. The stringent savings

programme was designed to eliminate

$110 million in costs by the end of 2005 but had

the effect of achieving savings of $160 million.

•

retrenchment costs were $26 million in 2005

compared with $7 million in 2004. These

costs were incurred as a result of a general

cost efficiency drive, the benefits of which

will be felt in coming years; the downsizing of

operations at Savuka as it moves to closure,

and staff reductions at other South African

mines;

•

rehabilitation and other non-cash costs

increased by $35 million compared with

the

previous year, largely because of

changes to estimates and a reassessment of

the processes to be undertaken to complete

the group’s restoration obligations;

•

the amortisation of tangible assets at

$503 million was $123 million higher than in

2004. This increase is largely attributable to

full year’s amortisation of the former

Ashanti assets and a reassessment of the useful

lives; and

•

inventory movement increased by $10 million

in 2005 compared with an increase of

$18 million in 2004. The favourable movement

in inventory arose mainly as a result of the

increase in heap-leach inventory at Cripple

Creek & Victor in the United States and grade

streaming at Siguiri in Guinea which resulted

in more ore being milled than was mined.

Other expenses

•

Corporate and other administration expenses

increased by $13 million on the previous year to

$64 million, as the costs associated with the

former Ashanti corporate offices were accounted

for the full 12 months. In addition, corporate

costs were further adversely affected by the

strengthening of local currencies against the

dollar in a largely rand-driven cost area.

•

Market development costs amounted to

$13 million, most of which was spent through

the World Gold Council.

•

Exploration continued to focus around the

operations in the countries in which the

group operates, namely, Argentina, Australia,

Brazil, Ghana, Guinea, Tanzania, Mali,

Namibia, South Africa and the USA. In

addition, exploration activities are moving to

new prospects in the Democratic Republic of

Congo, Colombia, Alaska, China, Mongolia

and Russia. The spend for 2005 was

$79 million of which $45 million was for

greenfields exploration. The decrease in

exploration costs of $1 million on the

previous year was a result of reduced

expenditure in brownfields areas.

•

The change in international accounting

standards from 1 January 2005 resulted in

the amortisation of goodwill reducing to nil.

Goodwill is no longer amortised but is

considered for impairment on an annual

basis.

•

Non-hedge derivatives recorded a loss in the

current year of $135 million compared to a

loss of $142 million in the previous year. The

loss is primarily a result of the revaluation of

non-hedge derivatives resulting from

changes in the prevailing spot gold price,

exchange rates, interest rates and greater

volatilities compared with the previous year.

•

categories

Total

male

male female female

nated

Total

male

male female female

nated

Legislators, senior officials

and managers

189

160

193

169

Professionals

890

105

678

212

981

117

742

104

239

Technicians and associate

professionals

1,705

404

1,032

213

673

1,979

416

1,157

164

242

822

Clerks

1,326

674

175

223

254

1,151

1,373

736

220

140

177

1,153

Craft and related trades

workers

3,451

1,588

1,423

222

218

2,028

3,852

1,743

1,617

247

245

2,235

Plant & machine operators

and assemblers

9,295

8,913

258

9,236

9,814

9,352

282

9,731

Elementary occupations

17,794

17,087

112

588

17,682

19,599

18,949

130

514

19,469

Total permanent

34,650

28,786

3,639

1,370

855

31,011

37,791

31,327

4,118

1,336

980

33,673

Non-permanent employees

9,718

8619

812

266

8,906

8,328

7,254

880

183

7,448

Total

44,368

37,405

4,451

1,636

876

39,917

46,119

38,581

4,998

1,549

991

41,121

The category Blacks includes Coloureds and Indians. Included in the above are 782 (2004: 636) people with disabilities. The above employee numbers
include AngloGold Health Services.

* Total designated = HDSA (black male, black female and white female).

CORPORATE GOVERNANCE

a different standard of director independence as

compared with the NYSE standard. The JSE Listings

Requirements only require a sufficient number of

independent directors. The NYSE rules require fully

independent nominations and remuneration

committees. In compliance with JSE Listings

Requirements, the company has a Nominations

Committee and a Remuneration Committee. Both

committees comprise solely of non-executive

directors, the majority of whom are independent, and

are chaired by the independent board chairman. The

NYSE rules require the company to provide a written

affirmation to the exchange in respect of the

significant differences between the NYSE and the

JSE as detailed in this paragraph. This written

affirmation was submitted in August 2005. These

significant differences are disclosed on our corporate

website, www.AngloGoldAshanti.com.

Electronic voting by shareholders

In the 2004 Annual Report the company reported

that it was investigating the feasibility of adopting an

electronic voting system to empower shareholders to

vote on resolutions at the AGM via the internet. The

company is still investigating this option and

shareholders will be informed of developments as

and when they happen.

Communications with directors

In addition to any anonymous and confidential report

stakeholders may wish to make using the whistle-

blowing policy detailed below (under “Codes of ethics

and whistle-blowing policy”), shareholders may

address any issue, complaint or concern directly to the

chairman of the board, the chairmen of any board

committee or any director using the following contact

details. Unless clearly addressed to a specific director

and marked “Confidential”, all correspondence will be

screened by the company secretary to determine to

which director or board committee chairman the

correspondence should be directed:

Write to:

[Name of director / Board committee / Chairman of

the Board]

c/o Company Secretary

AngloGold Ashanti Limited

PO Box 62117

Marshalltown 2107

South Africa

Facsimile: +27 11 637 6677 (Attention: Company

Secretary)

Email: CompanySecretary@AngloGoldAshanti.com

Codes of ethics and whistle-blowing
policy

In order to comply with the company’s obligations in

terms of the Sarbanes-Oxley Act and the King Code,

and in the interests of good governance, the company

has adopted a code of ethics for employees, a code

of ethics for senior financial officers, and a whistle-

blowing policy that encourages employees and other

stakeholders to confidentially and anonymously report

acts of an unethical or illegal nature affecting the

company’s interests. All reports made in terms of the

whistle-blowing policy are fielded by a third party, Tip-

Offs Anonymous, who ensures all reports are treated

confidentially or anonymously depending on the

preference of the caller. The information is relayed to

management and internal audit for investigation. All

reports and the progress of the investigations are

conveyed to the Audit and Corporate Governance

Committee by the group internal audit manager. Both

codes and the whistle-blowing policy are available on

the company website.

Access to information

The company has complied with its obligations in

terms of the South African Promotion of Access to

Information Act of 2000. The company’s access to

information manual is available on the company

website and from the company secretarial

department.

Sponsor

UBS acts as sponsor to the company in compliance

with the Listings Requirements of the JSE.

The board has ultimate responsibility for the total risk

management process within the group. The board

reviews and approves the risk strategy and policies

that are formulated by the executive directors and

senior management. Management is accountable to

the board and has established a group-wide system

of internal control to manage significant group risk.

This system assists the board in discharging its

responsibility for ensuring that the wide range of risks

associated with the group’s global operations are

effectively managed in support of the creation and

preservation of shareholder wealth. The risk

management policies are communicated to all

relevant employees.

A full review of the risk, control and disclosure

processes is undertaken annually to ensure that all

additional requirements are incorporated into the

system in the future. The systems are in place and

the focus is on ensuring that the requirements of the

King Code and the Sarbanes-Oxley Act are complied

with timeously. In conducting its annual review of the

effectiveness of risk management, the board

considers the key findings from the ongoing

monitoring and reporting process, management

assertions and independent assurance reports. The

board also takes account of material changes and

trends in the risk profile, and considers whether the

control system, including reporting, adequately

supports the board in achieving its risk management

objectives. The board furthermore, receives

assurance from the Audit and Corporate Governance

Committee, which derives its information, in part,

from regular internal and external audit reports on

risk and internal control throughout the group.

The company has a sound system of internal control,

based on the group’s policies and guidelines, in all

material subsidiaries and joint ventures under its

control. In respect of those entities in which

AngloGold Ashanti does not have a controlling

interest, the directors who represent AngloGold

Ashanti on the boards of these entities, seek

assurance that significant risks are being managed.

The board is satisfied that there is an ongoing

process for identifying, evaluating and managing the

significant risks and internal controls faced by the

group and if any weaknesses are identified, these are

promptly addressed.

The company’s chief executive and chief financial

officers are both required, in terms of the Sarbanes-

Oxley Act, to certify on Form 20-F that its financial

statements present a true and fair view, in all material

respects, of the company’s financial position, cash

flows and operational results, in accordance with

relevant accounting standards. The certificates

further provide that both officers are responsible for

establishing and maintaining disclosure and internal

controls and procedures for financial reporting. The

certification process is pre-approved by the board of

directors prior to filing of the Form 20-F with the SEC.

Risk factors

In this section references to AngloGold Ashanti are to

AngloGold Ashanti Limited, or as appropriate,

AngloGold Ashanti and its consolidated subsidiaries

and associate companies.

The risk factors set out in this document have been

organised into three categories:

•

risks related to the gold mining industry

generally;

•

risks related to AngloGold Ashanti’s operations;

and

•

risks related to AngloGold Ashanti’s ordinary

shares and ADSs.

Risks related to the gold mining industry

generally

The profitability of AngloGold Ashanti’s

operations, and the cash flows generated by

these operations, are significantly affected by

changes in the market price for gold.

The market price for gold can fluctuate widely. These

fluctuations are caused by numerous factors beyond

AngloGold Ashanti’s control, including:

•

speculative positions taken by investors or

traders in gold;

•

changes in the demand for gold as an

investment;

•

changes in the demand for gold used in

jewellery and for other industrial uses;

•

changes in the supply of gold from production,

disinvestment, scrap and hedging;

•

financial market expectations regarding the rate

of inflation;

Risk management

Risk management and internal controls

RISK MANAGEMENT

•

the strength of the dollar (the currency in which

the gold price trades internationally) relative to

other currencies;

•

changes in interest rates;

•

actual or expected gold sales by central banks

and the IMF;

•

gold sales by gold producers in forward

transactions;

•

global or regional political or economic events;

and

•

costs of gold production in major gold-

producing nations, such as South Africa, the

United States and Australia.

The price of gold is often subject to sharp, short-term

changes resulting from speculative activities. While

the overall supply of and demand for gold can affect

its market price, because of the considerable size of

above-ground stocks of the metal in comparison to

other commodities, these factors typically do not

affect the gold price in the same manner or degree

that the supply of and demand for other

commodities tends to affect their market price.

The following table presents the annual high, low and

average afternoon fixing prices over the past

10 years, expressed in dollars, for gold per ounce on

the London Bullion Market:

Year

High

Low

Average

1996

415

367

388

1997

367

283

331

1998

314

273

287

1999

340 252 278

2000 317

262

279

2001 298

253

271

2002 347

278

310

2003 417

320

364

2004 456

371

410

2005 536

411

445

Source of data: Metals Week, Reuters and London Bullion

Market Association

On 31 January 2006, the afternoon fixing price of gold

on the London Bullion Market was $568.75 per

ounce.

In addition to the spot price of gold, a portion of

AngloGold Ashanti’s gold sales is determined at

prices in accordance with the various hedging

contracts that it has entered into, and will continue to

enter into, with various gold hedging counterparties.

If revenue from gold sales falls below the cost of

production for an extended period, AngloGold

Ashanti may experience losses and be forced to

curtail or suspend some or all of its capital projects or

existing operations, particularly those operations

having operating costs that are flexible to such short-

to medium-term curtailment or closure, or change its

past dividend payment policies. In addition, it would

have to assess the economic impact of low gold

prices on its ability to recover any losses that may be

incurred during that period and on its ability to

maintain adequate cash reserves.

The profitability of AngloGold Ashanti’s

operations, and the cash flows generated by

these operations, are significantly affected by the

fluctuations in the price of input production

factors, many of which are linked to the price of

oil and steel.

Fuel, power and consumables, including diesel,

heavy fuel oil, chemical reagents, explosives and

tyres, which are used in mining operations form a

relatively large part of the operating costs of any

mining company. The cost of these consumables is

linked, to a greater or lesser extent, to the price of

oil. Furthermore, the cost of steel, which is used in

the manufacture of most forms of fixed and mobile

mining equipment, is also a relatively large

contributor to the operating costs and capital

expenditure of a mining company.

AngloGold Ashanti has estimated that for each

$1 per barrel rise in the oil price, the average cash

costs of all its operations increase by $0.30 per

ounce with the cash costs of certain of its mines,

which are more dependent on fuel, being more

sensitive to changes in the price of oil.

Fluctuations in the price of oil and steel have a

significant impact upon operating cost and capital

expenditure estimates and, in the absence of

other economic fluctuations, could result in

significant changes in the total expenditure

estimates for new mining projects. AngloGold

Ashanti has no influence over the price of fuel,

chemical reagents, explosives, steel and other

commodities used in its mining activities. High oil

and steel prices would have an adverse effect

upon the profitability of existing mining operations

and the returns anticipated from new mining

projects and could even render certain projects

non-viable.

RISK MANAGEMENT

Gold companies face many risks related to their

operations (including their exploration and

development activities) that may adversely affect

their cash flows and overall profitability.

Uncertainty and cost of mineral exploration and

acquisitions

Exploration activities are speculative and are often

unproductive. These activities also often require

substantial expenditure to:

•

establish the presence, and to quantify the extent

and grades (metal content), of mineralised

material through exploration drilling;

•

determine appropriate metallurgical recovery

processes to extract gold from the ore;

•

estimate ore reserves;

•

undertake feasibility studies and to estimate the

technical and economic viability of the project;

and

•

construct, renovate or expand mining and

processing facilities.

Once gold mineralisation is discovered it can take

several years to determine whether ore reserves exist.

During this time the economic feasibility of production

may change owing to fluctuations in factors that affect

revenue, as well as cash and other operating costs.

AngloGold Ashanti considers from time to time the

acquisition of Ore Reserves, development properties

and operating mines, either as stand-alone assets or

as part of companies. Its decisions to acquire these

properties have historically been based on a variety of

factors including historical operating results,

estimates of and assumptions regarding the extent of

Ore Reserves, cash and other operating costs, gold

prices and projected economic returns and

evaluations of existing or potential liabilities

associated with the property and its operations and

how these may change in the future. Other than

historical operating results, all of these parameters are

uncertain and have an impact upon revenue, cash

and other operating issues, as well as the

uncertainties related to the process used to estimate

Ore Reserves. In addition, there is intense competition

for the acquisition of attractive mining properties.

As a result of these uncertainties, the exploration

programmes and acquisitions engaged in by

AngloGold Ashanti may not result in the expansion or

replacement of the current production with new Ore

Reserves or operations. This could adversely affect

its results of operations and its financial condition.

Development risks

AngloGold Ashanti’s profitability depends, in part,

on the actual economic returns and the actual costs

of developing mines, which may differ significantly

from its current estimates. The development of its

mining projects may be subject to unexpected

problems and delays.

AngloGold Ashanti’s decision to develop a mineral

property is typically based, in the case of an

extension or, in the case of a new development, on

the results of a feasibility study. Feasibility studies

estimate the expected or anticipated project

economic returns. These estimates are based on

assumptions regarding:

•

future gold and other metal prices;

•

anticipated tonnage, grades and metallurgical

characteristics of ore to be mined and

processed;

•

anticipated recovery rates of gold and other

metals from the ore;

•

anticipated capital expenditure and cash

operating costs; and

•

the required return on investment.

Actual cash operating costs, production and

economic returns may differ significantly from

those anticipated by such studies and estimates.

Operating costs and capital expenditure are

determined particularly by the costs of the

commodity inputs, including the cost of fuel,

chemical reagents, explosives, tyres and steel,

that are consumed in mining activities. There are

a number of uncertainties inherent in the

development and construction of an extension to

an existing mine, or in the development and

construction of any new mine. In addition to those

discussed above these uncertainties include:

•

the timing and cost, which can be considerable,

of the construction of mining and processing

facilities;

•

the availability and cost of skilled labour, power,

water and transportation facilities;

•

the availability and cost of appropriate smelting

and refining arrangements;

•

the need to obtain necessary environmental and

other governmental permits and the timing of

those permits; and

•

the availability of funds to finance construction

and development activities.

RISK MANAGEMENT

100

The costs, timing and complexities of mine

development and construction can increase because

of the remote location of many mining properties.

New mining operations could experience

unexpected problems and delays during

development, construction and mine start-up. In

addition, delays in the commencement of mineral

production could occur. Finally, operating cost and

capital expenditure estimates could fluctuate

considerably as a result of fluctuations in the prices

of commodities consumed in the construction and

operation of mining projects. Accordingly, AngloGold

Ashanti’s future development activities may not result

in the expansion or replacement of current

production with new production, or one or more of

these new production sites or facilities may be less

profitable than currently anticipated or may not be

profitable at all.

Ore Reserve estimation risks

AngloGold Ashanti undertakes annual revisions to its

Mineral Resource and Ore Reserve estimates based

upon actual exploration and production results,

depletion, new information on geology and

fluctuations in production, operating and other costs

and economic parameters such as gold price and

exchange rates. These factors may result in

reductions in its Ore Reserve estimates, which could

adversely affect the life of mine plans and

consequently the total value of AngloGold Ashanti’s

mining asset base and, as a result, have an adverse

effect upon the market price of AngloGold Ashanti’s

ordinary shares and ADSs.

Mining industry risks

Gold mining is susceptible to numerous events that

may have an adverse impact on a gold mining

business. These events include, but are not limited to:

•

environmental hazards, including discharge of

metals, pollutants or hazardous chemicals;

•

industrial accidents;

•

underground fires;

•

labour disputes;

•

encountering unexpected geological formations;

•

unanticipated ground and water conditions;

•

unanticipated increases in gold lock-up and

inventory levels in our heap-leach operations;

•

fall-of-ground accidents in underground

operations;

•

failure of mining pit slopes and tailings dam

walls;

•

legal and regulatory restrictions and changes to

such restrictions;

•

seismic activity; and

•

other natural phenomena, such as floods or

inclement weather conditions.

Seismic activity is of particular concern to the gold

mining industry in South Africa, in part because of the

large percentage of deep-level gold mines. To

understand and manage this risk, AngloGold Ashanti

uses sophisticated seismic and rock mechanics

technologies. Despite the implementation of this

technology and modifications to mine layouts and

support technology with a view to minimising the

incidence, and impact, of seismic activity, seismic

events have in the past, and may in the future, cause

employee injury and death as well as substantial

damage to AngloGold Ashanti’s operations, both

within South Africa and elsewhere where seismic

activity may be a factor.

The occurrence of one or more of these events may

result in the death of, or personal injury to, miners,

the loss of mining equipment, damage to or

destruction of mineral properties or production

facilities, monetary losses, delays and unanticipated

fluctuations in production, environmental damage

and potential legal liabilities. As a result, these events

may have a material adverse effect on AngloGold

Ashanti’s operational results and its financial

condition.

Gold mining companies are increasingly required

to consider and ensure the sustainable

development of, and provide benefits to, the

communities and countries in which they

operate.

As a consequence of public concern about the

perceived ill effects of economic globalisation,

business generally, and in particular large

multinational corporations such as AngloGold

Ashanti, face increasing public scrutiny of their

activities.

These businesses are under pressure to

demonstrate that, as they seek to generate

satisfactory returns on investment to shareholders,

other “stakeholders” – including employees,

communities surrounding operations and the

countries in which they operate – benefit, and will

continue to benefit from these commercial activities,

which are also expected to minimise or eliminate any

damage to the interests of those stakeholders.

RISK MANAGEMENT

101

These pressures tend to be applied most strongly

against companies whose activities are perceived

to have a high impact on their social and physical

environment. The potential consequences of such

pressures, especially if not effectively managed,

include reputational damage, legal suits and

social spending obligations. All of these factors

could have a material adverse effect on

AngloGold Ashanti’s results of operations and its

financial condition.

Gold mining operations are subject to extensive

health and safety laws and regulations.

Gold mining operations are subject to a variety of

industry-specific health and safety laws and

regulations depending upon the jurisdiction in which

they are located. These laws and regulations are

formulated to improve and to protect the safety and

health of employees. If these laws and regulations

were to change and, if as a result, material additional

expenditure were required to comply with such new

laws and regulations, it could adversely affect

AngloGold Ashanti’s results of operations and its

financial condition.

Gold mining companies are subject to extensive

environmental laws and regulations.

Gold mining companies are subject to extensive

environmental laws and regulations in the various

jurisdictions in which they operate. These

regulations establish limits and conditions on gold

producers’ ability to conduct their operations. The

cost of AngloGold Ashanti’s compliance with

environmental laws and regulations has been

significant and is expected to continue to be

significant.

Gold mining companies are required to close their

operations and rehabilitate the lands that they

mine in accordance with environmental laws and

regulations. Estimates of the total ultimate closure

and rehabilitation costs for gold mining operations

are significant and based principally on current

legal and regulatory requirements that may

change materially. Environmental liabilities are

accrued when they are known, probable and can

be reasonably estimated. Increasingly, regulators

are seeking security in the form of cash collateral

or bank guarantees in respect of environmental

obligations, which could have an adverse effect

on AngloGold Ashanti’s financial condition.

Environmental laws and regulations are continually

changing and are generally becoming more

restrictive. If AngloGold Ashanti’s environmental

compliance obligations were to change as a result of

changes in the laws and regulations or in certain

assumptions it makes to estimate liabilities, or if

unanticipated conditions were to arise in its

operations, its expenses and provisions would

increase to reflect these changes. If material, these

expenses and provisions could adversely affect

AngloGold Ashanti’s results of operations and its

financial condition.

Risks related to AngloGold Ashanti’s operations

AngloGold Ashanti faces many risks related to its

operations that may affect its cash flows and overall

profitability.

AngloGold Ashanti uses hedging instruments to

protect against low gold prices and exchange

rate movements, which may prevent it from

realising all potential gains resulting from

subsequent gold price increases in the future.

AngloGold Ashanti currently uses hedging

instruments to fix the selling price of a portion of its

respective anticipated gold production and to protect

revenues against unfavourable gold price and

exchange rate movements. While the use of these

instruments may protect against a drop in gold prices

and exchange rate movements, it will do so for only

a limited period of time and only to the extent that the

hedge remains in place. The use of these

instruments may also prevent AngloGold Ashanti

from realising the positive impact on income from any

subsequent favourable increase in the price of gold

on the portion of production covered by the hedge

and of any subsequent favourable exchange rate

movements.

A significant number of AngloGold Ashanti’s hedge

contracts are not fair valued on the financial

statements as they are designated as Normal

Purchase Normal Sales contracts. Should AngloGold

Ashanti fail to deliver gold into these contracts in

accordance with their terms, then it would need to

account for the fair value of all of its hedge contracts

on the financial statements which could adversely

affect AngloGold Ashanti’s reported financial

condition.

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102

Foreign exchange fluctuations could have a

material adverse effect on AngloGold Ashanti’s

operating results and financial condition.

Gold is principally a dollar-priced commodity, and

most of AngloGold Ashanti’s revenues are realised

in or linked to dollars while production costs are

largely incurred in the applicable local currency

where the relevant operation is located. The

weakening of the dollar, without a corresponding

increase in the dollar price of gold against these

local currencies, results in lower revenues and

higher production costs in dollar terms.

Conversely, the strengthening of the dollar,

without a corresponding decrease in the dollar

price of gold against these local currencies

yields significantly higher revenues and lower

production costs in dollar terms. If material, these

exchange rate movements may have a material

adverse effect on AngloGold Ashanti’s results of

operations.

Since June 2002, the weakening of the dollar

against the South African rand, the Brazilian real,

the Argentinian peso and the Australian dollar has

had a negative impact upon AngloGold Ashanti’s

profitability. Conversely, in certain prior years, the

devaluation of these local currencies against the

dollar has had a significant positive effect on the

profitability of AngloGold Ashanti’s operations. In

2005, 2004 and 2003, AngloGold Ashanti derived

approximately 64%, 68% and 78%, respectively,

of its revenues from these countries and

approximately 58%, 64% and 76%, respectively,

of production costs in these local currencies.

In 2005, the weakening of the dollar against these

local currencies accounted for nearly $4 per

ounce, or 24% of the total increase in total cash

costs from 2004. In 2004, the weakening of the

dollar against these local currencies accounted

for nearly $28 per ounce, or 52% of the total

increase in total cash costs from 2003. These

impacts were partially offset by the increase in the

dollar price of gold, which increase was to some

extent a function of dollar weakness. In addition,

production costs in South African rand, Brazilian

real, Argentinian peso and Australian dollar terms

were only modestly offset by the effect of

exchange rate movements on the price of imports

denominated in dollars, as imported products

comprise a small proportion of production costs

in each of these countries.

To a lesser extent, and mainly as a result of

AngloGold Ashanti’s hedging instruments, a small

proportion of its revenues are denominated in South

African rands and Australian dollars, which may

partially offset the effect of the dollar’s strength or

weakness on AngloGold Ashanti’s profitability.

In addition, due to its global operations and local

foreign exchange regulations, some of AngloGold

Ashanti’s funds are held in local currencies, such

as the South African rand and Australian dollar.

The dollar value of these currencies may be

affected by exchange rate fluctuations. If material,

exchange rate movements may adversely affect

AngloGold Ashanti’s financial condition.

AngloGold Ashanti’s level of indebtedness may

adversely affect its business.

As of 31 December 2005, AngloGold Ashanti

had borrowings of $1,894 million. This level of

indebtedness could have adverse effects on

AngloGold Ashanti’s flexibility to do business.

Under the terms of AngloGold Ashanti’s borrowing

facilities from its banks it is obliged to meet certain

financial and other covenants. AngloGold Ashanti

expects to meet these covenants and to be able

to pay principal and interest on its debt by utilising

the cash flows from operations and, therefore, its

ability to do so will depend upon its future financial

performance which will be affected by its

operating performance as well as by financial and

other factors, certain of which are beyond its

control. AngloGold Ashanti may be required to

utilise a large portion of its cash flow to pay the

principal and interest on its debt which will reduce

the amount of funds available to finance existing

operations, the development of new organic

growth opportunities and further acquisitions.

AngloGold Ashanti’s level of indebtedness may

make it vulnerable to economic cycle downturns,

which are beyond its control, because during such

downturns, it cannot be certain that its future cash

flows will be sufficient to allow it to pay principal

and interest on its debt and also to meet its other

obligations. Should the cash flow from operations

be insufficient, it could breach its financial and

other covenants and may be required to refinance

all or part of its existing debt, utilise existing cash

balances, issue additional equity or sell assets.

AngloGold Ashanti cannot be sure that it will be

able to do so on commercially reasonable terms,

if at all.

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103

Inflation may have a material adverse effect on

AngloGold Ashanti’s results of operations.

Most of AngloGold Ashanti’s operations are located

in countries that have experienced high rates of

inflation during certain periods. Because it is unable

to control the market price at which it sells the gold it

produces (except to the extent that it enters into

forward sales and other derivative contracts), it is

possible that significantly higher future inflation in the

countries in which AngloGold Ashanti operates may

result in an increase in future operational costs in

local currencies, without a concurrent devaluation of

the local currency of operations against the dollar or

an increase in the dollar price of gold. This could

have a material adverse effect upon AngloGold

Ashanti’s results of operations and its financial

condition.

While none of AngloGold Ashanti’s specific

operations is currently materially adversely affected

by inflation, significantly higher and sustained inflation

in the future, with a consequent increase in

operational costs, could result in operations being

discontinued or reduced or rationalised at higher

cost mines.

AngloGold Ashanti’s new order mineral rights in

South Africa could be suspended or cancelled

should the company breach, and fail to remedy

such breach of, its obligations in respect of the

acquisition of these rights.

AngloGold Ashanti’s rights to own and exploit mineral

reserves and deposits are governed by the laws and

regulations of the jurisdictions in which the mineral

properties are located. Currently, a significant portion

of its mineral reserves and deposits are located in

South Africa.

The Mineral and Petroleum Resources Development

Act (MPRDA) vests custodianship of South Africa’s

mineral rights in the State. The State issues

prospecting rights or mining rights to applicants.

Prospecting, mining and mineral rights formerly

regulated under the Minerals Act 50 of 1991 and

common law are now known as old order rights

and the transitional arrangements provided in

Schedule II to the MPRDA give holders of such old

order rights the opportunity to convert their old

order rights into new order rights within specified

time frames.

The Department of Minerals and Energy has

published, pursuant to the MPRDA, the Broad-

Based Socio-Economic Empowerment Charter for

the South African Mining Industry (the Charter). The

objectives of the Charter are to:

•

promote equitable access to the nation’s

mineral resources to all the people of South

Africa;

•

substantially and meaningfully expand

opportunities for historically disadvantaged

South Africans (HDSAs) – that is, any person,

category of persons or community,

disadvantaged by unfair discrimination

before the Constitution of the Republic of South

Africa of 1993 came into operation, including

women – to enter the mining and minerals

industry and to benefit from the exploitation of

the nation’s mineral resources;

•

utilise the existing skills base for the

empowerment of HDSAs;

•

expand the skills base of HDSAs in order to

serve the community;

•

promote employment and advance the social

and economic welfare of mining communities

and the major labour sending areas; and

•

promote beneficiation of South Africa’s mineral

commodities.

The Charter, compliance with which is measured

using a designated Scorecard, requires that every

mining company achieve 15% ownership by HDSAs

of its South African mining assets by 1 May 2009,

and 26% ownership by 1 May 2014.

The Scorecard allows for a portion of “offset” against

these HDSA equity participation requirements insofar

as companies have facilitated downstream, value-

adding activities in respect of the products they mine.

AngloGold Ashanti carries out such downstream

activities and believes these will be recognised in

terms of a framework currently being devised by the

South African government.

AngloGold Ashanti has completed a number of asset

sales to companies owned by HDSAs in the past

seven years. It estimates that these sales transferred

20% of its attributable production in South Africa to

HDSAs. In addition, AngloGold Ashanti is continuing

to evaluate alternative ways in which to further

achieve the objectives of the Charter. On 8 June

2005, AngloGold Ashanti announced that it was

considering establishing an Employee Share

Ownership Programme with a value equivalent to

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104

approximately 6% of its South African assets,

consistent with the company’s stated strategic

intention to develop means of promoting broad-

based equity participation in the company by

HDSAs. The scope and terms of the programme

remain under consideration and, once finalised, an

announcement will be made and, if appropriate, the

terms will be put to shareholders for their approval.

AngloGold Ashanti believes that it has made

significant progress towards meeting the

requirements of the Charter and the Scorecard in

terms of human resource development, employment

equity, mine community and rural development,

housing and living conditions, procurement and

beneficiation, including the implementation of

programmes to help achieve the requirement of

having 40% of HDSAs in management roles by

2010. AngloGold Ashanti may incur expenses in

giving further effect to the Charter and the

Scorecard.

AngloGold Ashanti was informed on 1 August 2005

by the Director General of Minerals and Energy that

its applications to convert its old order rights to new

order rights for its West Wits and Vaal River

operations, as well as its applications for new mining

rights to extend its mining areas at its TauTona and

Kopanang mines had been successful. These

applications relate to all of its existing operations in

South Africa. AngloGold Ashanti is in the process of

reviewing certain draft notarial rights agreements,

which it recently received from the Department of

Minerals and Energy relating to the various rights,

and will lodge these for registration with the Mining

Titles Registration Office in due course. The notarial

agreement for the West Wits operations has

subsequently been executed and was lodged for

registration on 9 February 2006. AngloGold Ashanti

submitted two applications to the Department of

Minerals and Energy for the conversion of two

unused old order prospecting rights to new order

prospecting rights, one of which it has subsequently

withdrawn. The Department of Minerals and Energy

is considering the remaining application.

Even where new order rights are obtained under the

MPRDA, these rights may not be equivalent to the old

order rights. The duration of the new rights will no

longer be perpetual as was the case under old order

rights but rather will be granted for a maximum period

of 30 years, with renewals of up to 30 years each and,

in the case of prospecting rights, a maximum period of

five years with one renewal of up to three years. The

MPRDA provides for a retention period after

prospecting of up to three years with one renewal of

up to two years, subject to certain conditions, such as

non-concentration of resources, fair competition and

non-exclusion of others. In addition, the new order

rights will only be transferable subject to the approval

of the Minister of Minerals and Energy.

The new order rights can be suspended or cancelled

by the Minister of Minerals and Energy if, upon notice

of a breach from the Minister, the entity breaching its

obligations in terms of the guidelines issued for

converted mining rights fails to remedy such breach.

The MPRDA also imposes additional responsibilities

on mining companies relating to environmental

management and to environmental damage,

degradation or pollution resulting from their

prospecting or mining activities. AngloGold Ashanti

has a policy of evaluating, minimising and addressing

the environmental consequences of its activities and,

consistent with this policy and the MPRDA, conduct

an annual review of the environmental costs and

liabilities associated with the group’s South African

operations in light of the new, as well as existing,

environmental requirements.

The proposed introduction of South African State

royalties, as well as proposed changes to the

fiscal regime for mining companies in South

Africa, where a significant portion of AngloGold

Ashanti’s mineral reserves and operations are

located, could have an adverse effect on its

results of operations and its financial condition.

The South African government has announced that it

is considering new legislation, whereby the new

order rights will be subject to a State royalty. The

extent and basis of that royalty are unknown at

present. The draft Mineral and Petroleum Royalty Bill

was released in March 2003 for comments and

proposed a royalty payment of 3% of gross revenue

per year, payable quarterly, in the case of gold. The

draft provided that the royalty payments would have

commenced upon the conversion and granting of a

new mining right.

AngloGold Ashanti and other members of the South

African mining community have submitted comments

on the draft bill to the relevant authorities. These

comments included recommendations for a profit-

based, rather than a revenue-based, royalty and in

order not to delay the conversion of mineral rights

RISK MANAGEMENT

105

from old into new order rights, it was recommended

that the proposed royalty should only become

payable from 1 May 2009, which date is the final

date for conversion of the old order into new order

mining rights in terms of the MPRDA. In addition, a

reduction in the royalty rate from that proposed in the

draft Mineral and Petroleum Royalty Bill has been

proposed. On 18 February 2004, in the Budget

Speech for the 2004 fiscal year, the South African

Minister of Finance proposed several refinements to

the draft Mineral and Petroleum Royalty Bill. These

included a delay in the introduction of the royalty to

1 May 2009, and confirmation of the South African

government’s preference for a revenue-based royalty.

It was further indicated that the royalty regime would

take cognisance of the mining sector’s diverse

production and profitability dynamics with differential

rates to apply to marginal mining operations.

The introduction of the proposed royalty would have

an adverse impact upon AngloGold Ashanti’s

profitability, as currently no royalty is payable to the

State. However, the Minister of Finance announced

also that due to the new regulatory system for the

mining rights under the MPRDA and accompanying

royalty dispensation under the draft Mineral and

Petroleum Royalty Bill, it had become imperative to

reassess the current fiscal regime as applicable to

the mining and petroleum industries in South Africa,

including tax, depreciation, rate differentiation for

mining sectors, allowable deductions and

exemptions from secondary tax on companies in

terms of South Africa’s income tax laws. Also due for

review is the gold mining tax formula, which provides

income tax exemption and relief from secondary tax

on companies for gold mines, despite the existence

of profit. The impact of these proposed reviews is

unknown at this stage, but they may have an adverse

effect on AngloGold Ashanti’s results of operations

and its financial condition.

AngloGold Ashanti may need to improve its

internal control over financial reporting and its

independent auditors may not be able to attest to

their effectiveness, which could have a significant

adverse effect on AngloGold Ashanti’s results of

operations, its reputation and its financial

condition.

AngloGold Ashanti is evaluating its internal control

over financial reporting in order to allow management

to report on, and its independent auditors to attest

to, its internal control over financial reporting, as

required by Section 404 of the US Sarbanes-Oxley

Act of 2002 and the rules and regulations of the SEC

thereunder (collectively Section 404). AngloGold

Ashanti is currently performing the system and

process evaluation and testing required, and any

necessary remediation, in an effort to comply with

the management certification and auditor attestation

requirements of Section 404. The management

certification and auditor attestation requirements of

Section 404 will initially apply to AngloGold Ashanti

for its annual report on Form 20-F for the year ended

31 December 2006. In the course of its ongoing

Section 404 evaluation, AngloGold Ashanti has

identified areas of internal control over financial

reporting that need improvement and it has designed

enhanced processes and controls, and plans to

design additional enhanced processes and controls,

as necessary, to address these and any other issues

that might be identified in the future through this

review.

Because AngloGold Ashanti is still in the evaluation

process, it may identify other conditions that may

result in significant deficiencies or material

weaknesses in the future, which could impact its

ability to comply with Section 404 in a timely manner.

If AngloGold Ashanti is not able to implement the

requirements of Section 404 in a timely manner or

with adequate compliance, its independent auditors

may not be able to attest to the effectiveness of its

internal control over financial reporting and it may be

subject to sanctions or investigation by regulatory

authorities, such as the SEC. As a result, there could

be a negative reaction in the financial markets due to

a loss of confidence in the reliability of AngloGold

Ashanti’s financial statements. In addition, AngloGold

Ashanti may be required to incur additional costs in

improving its internal control system. Any such action

could negatively affect AngloGold Ashanti’s results

and have an adverse effect on its results of

operations, its reputation and its financial condition.

Certain factors may affect AngloGold Ashanti’s

ability to support the carrying value of its

property, plant and equipment, acquired

properties, investments and goodwill on its

balance sheet.

AngloGold Ashanti reviews and tests the carrying

value of its assets when events or changes in

circumstances suggest that the carrying amount may

not be recoverable. AngloGold Ashanti groups

assets at the lowest level for which identifiable cash

RISK MANAGEMENT

106

flows are largely independent of cash flows of other

assets and liabilities. If there are indications that

impairment may have occurred, AngloGold Ashanti

prepares estimates of expected future cash flows for

each group of assets. Expected future cash flows are

inherently uncertain, and could materially change

over time. They are significantly affected by reserve

and production estimates, together with economic

factors such as spot and forward gold prices,

discount rates, currency exchange rates, estimates

of costs to produce reserves and future capital

expenditure.

If any of these uncertainties occur either alone or in

combination, it could require management to

recognise an impairment, which could adversely

affect AngloGold Ashanti’s financial condition.

If the development of the deep-level ore deposits

at Obuasi mine is not economically feasible,

there may be a material adverse effect on

AngloGold Ashanti’s results of operations and its

financial condition.

A key aspect of the business combination of

AngloGold and Ashanti was the development of the

deep-level extension of the existing orebody at the

Obuasi mine, otherwise referred to as Obuasi Deeps.

This development could potentially extend the life of

this mine to well beyond 2030. In furtherance of this

goal, AngloGold Ashanti has commenced exploration

at Obuasi Deeps and intends in due course, based

upon the information as it becomes available, to

undertake feasibility studies to estimate the extent of

the Ore Reserves, operating costs, capital

expenditure and economic returns and consequently,

the viability of mining Obuasi Deeps. If as a result

this further exploration and following the

completion of these feasibility studies, AngloGold

Ashanti determines that the development of the

Obuasi Deeps is not economically feasible, such

determination may have a material adverse effect

on its results of operations and financial condition in

the long term. The funding of the development of

Obuasi Deeps will proceed only if AngloGold Ashanti

continues to determine the development to be

economically feasible.

AngloGold Ashanti’s mineral reserves and

deposits and mining operations are located in

countries that face political, economic and

security risks.

Some of AngloGold Ashanti’s mineral deposits and

mining and exploration operations are located in

countries that have experienced political instability

and economic uncertainty. In all of the countries

where AngloGold Ashanti operates, the formulation

or implementation of government policies may be

unpredictable on certain issues including regulations

which impact on its operations, and changes in laws

relating to issues such as mineral rights ownership,

taxation, royalties, import and export duties, currency

transfers, restrictions on foreign currency holdings

and repatriation of earnings.

Any existing and new mining and exploration

operations and projects AngloGold Ashanti

carries out in these countries are and will be

subject to various national and local laws, policies

and regulations governing the prospecting,

development and mining of mineral reserves,

taxation and royalties, exchange controls, import

and export duties and restrictions, investment

approvals, employee and social/community

relations and other matters. If, in one or more of

these countries, AngloGold Ashanti was not able

to obtain or maintain necessary permits,

authorisations or agreements to implement

planned projects or continue its operations under

conditions or within time frames that make such

plans and operations economic, or if legal,

ownership, fiscal (including all royalties and

duties), exchange control, employment,

environmental and social laws and regimes, or the

governing political authorities change materially

which could result in changes to such laws and

regimes, its results of operations and its financial

condition could be adversely affected.

In a number of countries, particularly in Africa,

AngloGold Ashanti is due refunds of input tax which

remain outstanding for periods longer than those

provided for in the respective statutes. In addition,

AngloGold Ashanti has unresolved tax disputes in a

number of countries, particularly in Tanzania, Mali and

Brazil. If the outstanding input taxes are not received

and the tax disputes are not resolved in a manner

favourable to AngloGold Ashanti, it could have an

adverse effect upon its results of operations and its

financial condition.

Certain of the countries in which AngloGold Ashanti

has mineral deposits or mining or exploration

operations, including the Democratic Republic of

Congo and Colombia, have in the past experienced

RISK MANAGEMENT

CORPORATE GOVERNANCE AND RISK MANAGEMENT

107

and in certain cases continue to experience, a

difficult security environment as well as political

instability. In particular, various illegal groups active in

regions in which the company is present may pose a

credible threat of extortion and kidnapping, which

could have an adverse effect on the company’s

operations in such regions. In the event that

continued operations in these countries compromise

AngloGold Ashanti’s security or business principles, it

may withdraw from these countries on a temporary

or permanent basis, which in turn, could have an

adverse impact on its results of operations and its

financial condition.

Labour disruptions in South Africa and other

countries could have an adverse effect on

AngloGold Ashanti’s operating results and

financial condition.

As at 31 December 2005, approximately 66% (2004:

69%) of AngloGold Ashanti’s workforce was located

in South Africa.

Approximately 95% of the workforce on its

South African operations is unionised, with the

National Union of Mineworkers (NUM)

representing the majority of unionised workers.

AngloGold Ashanti’s employees in some South

American countries are also highly unionised.

Trade unions have a significant impact on

AngloGold Ashanti’s labour relations climate, as

well as on social and political reforms, most

notably in South Africa. In 1987, the NUM

embarked on a three-week strike in support of a

wage demand. Since then labour relations

between AngloGold Ashanti and the industry

have stabilised. This is in part due to the

presence of the representative unions and the

part they play in ensuring orderly collective

bargaining. Furthermore, AngloGold Ashanti has

instituted a number of processes at both mine

and at company level, whereby management

and unions interact regularly and address areas

of difference as they arise. It has become

established practice to negotiate wages and

conditions of employment with the unions every

two years through the Chamber of Mines of

South Africa. A two-year wage agreement was

signed with the NUM in August 2005, following

negotiations between the NUM, UASA (on

behalf of some clerical and junior management

staff) and Solidarity (on behalf of a small number

of miners) and the Chamber of Mines.

Agreement was only reached after a four-day

strike which affected all of AngloGold Ashanti’s

operations in South Africa. In contrast with

previous strikes, this stoppage was peaceful

and orderly and it is estimated that lost

production, as a result of the strike, was made

up in a reasonably short time period.

The Ashanti operations acquired in the business

combination and their mining contractors also

rely to a large degree on a unionised workforce.

In 1999, Ashanti experienced strikes at the

Obuasi mine in Ghana.

There is a risk that strikes or other types of

conflict with unions or employees may occur at

any one of AngloGold Ashanti’s operations. It is

uncertain whether labour disruptions will be used

to advocate labour, political or social goals in the

future. Should any labour disruptions occur, if

material, they could have an adverse effect on

AngloGold Ashanti’s results of operations and its

financial condition.

The use of mining contractors at certain of

AngloGold Ashanti’s operations may expose it to

delays or suspensions in mining activities.

Mining contractors are used at certain of

AngloGold Ashanti’s mines, including Sadiola,

Morila and Yatela in Mali, Siguiri in Guinea,

Iduapriem in Ghana and Sunrise Dam in Australia,

to mine and deliver ore to processing plants.

Consequently, at these mines, AngloGold Ashanti

does not own all of the mining equipment and

may face disruption of operations and incur costs

and liabilities in the event that any of the

mining contractors at these mines has financial

difficulties, or should there be a dispute in

renegotiating a mining contract, or a delay in

replacing an existing contractor.

AngloGold Ashanti competes with mining and

other companies for key human resources.

AngloGold Ashanti competes with mining and

other companies to attract and retain key

executives and other employees with appropriate

technical skills and managerial experience

necessary to continue to operate its business.

The retention of staff is particularly challenging in

South Africa, where AngloGold Ashanti is required

to achieve employment equity targets of

RISK MANAGEMENT

108

participation by HDSAs in management and other

positions. AngloGold Ashanti competes with all

companies in South Africa to attract and retain a

small but growing pool of HDSAs with the

necessary skills and experience. For further

details see the risk factor “AngloGold Ashanti’s

new order mineral rights in South Africa could be

suspended or cancelled should the company

breach, and fail to remedy such breach of, its

obligations in respect of the acquisition of these

rights” on page 103.

There can be no assurance that AngloGold Ashanti will

attract and retain skilled and experienced employees

and, should it lose any of its key personnel, its

business may be harmed and its results of operations

and its financial condition could be adversely affected.

AngloGold Ashanti faces certain risks in

dealing with HIV/AIDS which may adversely

affect its results of operations and its financial

condition.

AIDS remains the major health care challenge

faced by AngloGold Ashanti’s South African

operations. Accurate prevalence data for AIDS is

not available. The South African workforce

prevalence studies indicate that the percentage of

AngloGold Ashanti’s South African workforce that

may be infected by HIV may be as high as 30%.

AngloGold Ashanti is continuing to develop and

implement various programmes aimed at helping

those who have been infected with HIV and

preventing new infections. Since 2002 AngloGold

Ashanti has offered a voluntary monitored anti-

retroviral therapy programme for employees in

South Africa who are infected with HIV. This

programme offers a triple combination drug

regimen, known as a drug cocktail, to wellness

clinic patients that meet the medical eligibility

criteria for starting treatment. From April 2003,

AngloGold Ashanti’s commenced a roll-out of the

treatment to all eligible employees desiring it.

Currently approximately 4,000 employees are on

the wellness programme and as at June 2005,

approximately 1,200 employees had received

treatment using anti-retroviral drugs.

The cost of providing rigorous outcome-focused

disease management of employees with AIDS,

including the provision of an anti-retroviral drug

cocktail, is on average $185 per employee on

treatment per month. It is not yet possible to

develop an accurate cost estimate of the

programme in its entirety, given uncertainties such

as drug prices and the ultimate rate of employee

participation. AngloGold Ashanti does not expect

the cost that it will incur related to the prevention

of HIV infection and the treatment of AIDS to

materially and adversely affect the results of

operations. Nevertheless, it is not possible to

determine with certainty the costs that AngloGold

Ashanti may incur in the future in addressing this

issue, and consequently its results of operations

and its financial condition could be adversely

affected.

AngloGold Ashanti faces certain risks in dealing

with malaria, particularly at its operations located

in Africa, which may have an adverse effect on its

results of operations.

Malaria is a significant health risk at all of

AngloGold Ashanti’s operations in Central, West

and East Africa where the disease assumes

epidemic proportions because of ineffective

national control programmes. The disease is a

major cause of death in young children and

pregnant women but also gives rise to fatalities

and absenteeism in adult men. Consequently, if

uncontrolled, the disease could have an adverse

effect upon productivity and profitability levels of

AngloGold Ashanti’s operations located in these

regions.

The treatment of occupational health diseases

and the potential liabilities related to

occupational health disease may have an

adverse effect upon the results of AngloGold

Ashanti’s operations and its financial condition.

The primary areas of focus in respect of

occupational health within AngloGold Ashanti’s

operations are noise-induced hearing loss (NIHL),

occupational lung diseases (OLD) and

tuberculosis (TB). AngloGold Ashanti incurs costs

in providing occupational health services to its

employees at various occupational health centres

and it continues to implement initiatives with a

view to limiting the incidence and severity of these

occupational health diseases. If the costs

associated with providing such occupational

health services increase, such increase could

have an adverse effect on AngloGold Ashanti’s

results of operations and its financial condition.

RISK MANAGEMENT

109

Furthermore, the South African government, by

way of a cabinet resolution in 1999, proposed a

possible combination and alignment of benefits of

the Occupational Diseases in Mines and Works

Act (ODMWA) that provides for compensation to

miners who have occupational lung diseases, TB

and combinations thereof, and the Compensation

for Occupational Injuries and Diseases Act

(COIDA) that provides for compensation to non-

miners who have OLD, as well as compensation

to both miners and non-miners who suffer

accidental injury in the workplace. Based on a

recently proposed resolution, it is possible that

these acts will be combined in the future.

COIDA provides for compensation payments to

workers suffering permanent disabilities from

OLD, which are classified as pension liabilities if

the permanent disability is above a certain

threshold, or a lump sum compensation payment

if the permanent disability is below a certain

threshold. ODMWA only provides for a lump sum

compensation payment to workers suffering from

OLD. The capitalised value of a pension liability (in

accordance with COIDA) is usually greater than

that of a lump sum compensation payment (under

ODMWA). In addition, under COIDA

compensation becomes payable at a lower

threshold of permanent disability than under

ODMWA. It is estimated that under COIDA about

two to three times as many of AngloGold

Ashanti’s employees would be compensated as

compared with those eligible for compensation

under ODMWA. If the proposed combination of

COIDA and ODMWA were to occur, this could

further increase the level of compensation claims

AngloGold Ashanti could be subject to and

consequently could have an adverse effect on its

financial condition.

The costs associated with the pumping of

water inflows from closed mines adjacent to

AngloGold Ashanti’s operations could have an

adverse effect upon its results of operations.

Certain of AngloGold Ashanti’s mining operations

are located adjacent to the mining operations of

other mining companies. The closure of a mining

operation may have an impact upon continued

operations at the adjacent mine if appropriate

preventative steps are not taken. In particular, this

can include the ingress of underground water

where pumping operations at the adjacent closed

mine are suspended. Such ingress could have an

adverse effect upon any one of AngloGold

Ashanti’s mining operations as a result of property

damage, disruption to operations and additional

pumping costs.

AngloGold Ashanti has embarked on legal action

in South Africa after the owner of an adjacent

mine put the company owning the adjacent

mining operation into liquidation, raising

questions about its and other companies’

willingness to meet their water pumping

obligations. Should this action not be successful,

or in the absence of other solutions, AngloGold

Ashanti may be forced to meet all or part of the

costs associated with the ingress of underground

water, which could have an adverse effect on its

results of operations and its financial condition.

Some of AngloGold Ashanti’s power supplies are

not always reliable and have on occasion forced

it to halt or curtail activities at its mines. Power

fluctuations and power cost increases may

adversely affect AngloGold Ashanti’s results of

operations and its financial condition.

All of AngloGold Ashanti’s mining operations in

Ghana are dependent for their electricity supply

on hydro-electric power supplied by the Volta

River Authority, or VRA, an entity controlled by the

government of Ghana, although AngloGold

Ashanti also has access to VRA electricity supply

from a recently constructed smaller thermal plant.

The VRA’s principal electricity generating facility is

the Akosombo Dam and during periods of below

average inflows from the Volta reservoir, electricity

supplies from the Akosombo Dam may be curtailed,

as occurred in 1998. In addition, this electricity

supply has been subject to voltage fluctuations,

which can damage the group’s equipment. Other

than short-term stand-by generators, which are not

sufficient to allow AngloGold Ashanti to continue

mining operations, it has no means of obtaining

alternative power in the event of a supply shortage

from the VRA. The VRA also obtains power from

neighbouring Cote d’Ivoire, which has intermittently

experienced some political instability and civil unrest.

These factors, including increased power demand

from other users in Ghana, may cause interruptions

in AngloGold Ashanti’s power supply to its

operations in Ghana or result in increases in the cost

of power even if they do not interrupt supply.

RISK MANAGEMENT

110

Consequently, these factors may adversely affect

AngloGold Ashanti’s results of operations and its

financial condition.

AngloGold Ashanti’s mining operations in Guinea,

Tanzania and Mali are dependent on power

supplied by outside contractors and supplies of

fuel being delivered by road. AngloGold Ashanti’s

power supply has been disrupted in the past and

it has suffered resulting production losses as a

result of equipment failure. Should similar events

occur in future, or should power fluctuations or

power cost increases adversely affect AngloGold

Ashanti’s other operations, this would have an

adverse effect on AngloGold Ashanti’s operational

results and its financial condition.

The occurrence of events for which AngloGold

Ashanti is not insured or for which its insurance

is inadequate may adversely affect its cash flows

and overall profitability.

AngloGold Ashanti maintains insurance to protect

only against catastrophic events which could have a

significant adverse effect on its operations and

profitability. This insurance is maintained in amounts

that are believed to be reasonable depending upon

the circumstances surrounding each identified risk.

However, AngloGold Ashanti’s insurance does not

cover all potential risks associated with its business.

In addition, AngloGold Ashanti may elect not to

insure certain risks, due to the high premiums

associated with insuring those risks or for various

other reasons, including an assessment that the risks

are remote. Furthermore, AngloGold Ashanti may not

be able to obtain insurance coverage at acceptable

premiums. AngloGold Ashanti has a captive

insurance company, namely AGRe Insurance

Company Limited, which participates at various

levels in certain of the insurances maintained by

AngloGold Ashanti. The occurrence of events for

which it is not insured may adversely affect

AngloGold Ashanti’s cash flows and overall

profitability.

Risks related to AngloGold Ashanti’s ordinary

shares and American Depositary Shares (ADSs)

Sales of large numbers of AngloGold Ashanti’s

ordinary shares and ADSs, or the perception that

these sales may occur, could adversely affect the

prevailing market price of such securities.

The market price of AngloGold Ashanti’s ordinary

shares or ADSs could fall if large amounts of ordinary

shares or ADSs are sold in the public market, or there

is the perception in the marketplace that such sales

could occur. Holders of AngloGold Ashanti’s ordinary

shares or ADSs may decide to sell them at any time.

Sales of ordinary shares or ADSs if substantial, or the

perception that sales may occur and be substantial,

could exert downward pressure on the prevailing

market prices for AngloGold Ashanti ordinary shares

or ADSs, causing their market prices to decline.

Fluctuations in the exchange rate of different

currencies may reduce the market value of

AngloGold Ashanti’s securities, as well as the

market value of any dividends or distributions

paid by AngloGold Ashanti.

AngloGold Ashanti has historically declared all

dividends in South African rands. As a result,

exchange rate movements may have affected and

may continue to affect the Australian dollar, the

British pound, the Ghanaian cedi and the US dollar

value of these dividends, as well as of any other

distributions paid by the relevant depositary to

investors that hold AngloGold Ashanti’s securities.

This may reduce the value of these securities to

investors. At the general meeting of AngloGold

Ashanti’s shareholders held on 5 December 2002, a

majority of the group’s shareholders passed a special

resolution adopting a new Memorandum and Articles

of Association, which, among other things, allows for

dividends and distributions to be declared in any

currency at the discretion of AngloGold Ashanti’s

board of directors, or its shareholders at a general

meeting. If and to the extent that AngloGold Ashanti

declares dividends and distributions in dollars,

exchange rate movements will not affect the dollar

value of any dividends or distributions. Nevertheless,

the value of any dividend or distribution in Australian

dollars, British pounds, Ghanaian cedis or South

African rands will continue to be affected. If and to

the extent that dividends and distributions are

declared in South African rands, exchange rate

movements will continue to affect the Australian

dollar, British pound, Ghanaian cedi and US dollar

value of these dividends and distributions.

Furthermore, the market value of AngloGold

Ashanti’s securities as expressed in Australian

dollars, British pounds, Ghanaian cedis, US dollars

and South African rands will continue to fluctuate

with exchange rate movements.

FINANCIAL STATEMENTS

for the year ended 31 December

111

Directors’ approval

The annual financial statements and group annual financial statements for the year ended 31 December 2005 were approved by the board

of directors on 28 February 2006 and are signed on its behalf by:

Directors

RP Edey, Chairman

RM Godsell, Chief Executive Officer

S Venkatakrishnan, Executive Director: Finance

CB Brayshaw, Chairman, Audit and Corporate Governance Committee

Managing secretary

Ms YZ Simelane

Secretary’s certificate

In terms of Section 268G(d) of the Companies Act, 1973, I certify that the company has lodged with the Registrar of Companies all such

returns as are required of a public company in terms of the Act, and that all such returns are true, correct and up to date.

Ms YZ Simelane

Managing Secretary

Johannesburg

28 February 2006

FINANCIAL STATEMENTS

for the year ended 31 December

Report of the independent auditors
to the members of AngloGold Ashanti Limited

112

We have audited the annual financial statements of the AngloGold Ashanti Limited group and company as set out on pages 113 to 246 for the year

ended 31 December 2005. These financial statements are the responsibility of the company’s directors. Our responsibility is to express an opinion

on these financial statements based on our audit.

We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant

estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable

basis for our opinion.

In our opinion, the financial statements present fairly, in all material respects, the financial position of the AngloGold Ashanti Limited group and

company at 31 December 2005, and the results of its operations and its cash flows for the year then ended in accordance with International Financial

Reporting Standards, and in the manner required by the Companies Act of South Africa.

Ernst & Young

Registered Accountants and Auditors

Chartered Accountants (SA)

Johannesburg, Republic of South Africa

28 February 2006

The Remuneration Committee sets and monitors executive remuneration for the company. This is achieved through an Executive Remuneration Policy
which has as its objectives to:

•

attract, reward and retain executives of the highest calibre;

•

align the behaviour and performance of executives with the company’s strategic goals, in the overall interests of shareholders;

•

ensure the appropriate mix of short-, medium- and long-term rewards and incentives, with the latter being closely linked to structured company
performance targets and strategic objectives that are in place; and

•

ensure that regional management is competitively rewarded within a global remuneration policy, which recognises both local and global market
practice.

In particular the Remuneration Committee is responsible for:

•

the remuneration packages for executive directors of the company including, but not limited to, basic salary, performance-based short- and long-
term incentives, pensions, and other benefits; and

•

the design and operation of the company’s executive share option and other incentive schemes.

Remuneration Committee

For 2005, members of the Committee comprised the following non-executive directors:

•

Russell Edey (Chairman)

•

Colin Brayshaw

•

Tony Trahar

During the year, four meetings of the Remuneration Committee were held. Attendance by members or their designated alternates was as follows:

Number of meetings held

Number attended

RP Edey

CB Brayshaw

AJ Trahar

All meetings of the committee are attended by the chief executive officer and executive officer: human resources, except when their own remuneration
or benefits are being discussed. The services of Deloitte & Touche are retained to act as independent, expert advisers on executive remuneration.

The following principles are applied in determining executive remuneration:

Annual remuneration should be a combination of base pay and short-, medium- and long-term incentives, with salary comprising about 50% of
annual remuneration.

Salary should be set at the median for the relevant competitive markets.

All incentive plans should align performance targets with shareholder interests.

Bonus Share Plan (BSP) and Long-Term Incentive Plan (LTIP)

Shareholders approved the introduction of two new schemes to replace the old share incentive scheme at the annual general meeting held on 29 April
2005. The intention behind both schemes is to provide direct linkage between the interests of shareholders and the efforts of executives or managers.

To the extent that structured company performance targets are achieved, the BSP allows for the payment of an annual bonus, paid in part in cash
and part in rights to acquire shares.

The LTIP allows for the granting of rights to acquire shares, based on the achievement of stretched company performance targets over a three-
year period.

These targets will be based on the performance of earnings per share (EPS) and relative total shareholder return (TSR), whereby the company will
need to outperform its gold company peers consistently. Additionally, strategic business objectives will also need to be met, such as the successful
integration of Ashanti into AngloGold.

Executive director remuneration currently comprises the following elements:

Basic salary, which is subject to annual review by the Remuneration Committee and is set in line with the median of salaries in similar companies
in the relevant markets both in South Africa and globally. The individual salaries of executive directors are reviewed annually in light of their own
performance, experience, responsibility and company performance.

Annual bonus, which is determined by the achievement of a set of stretching company and individual performance targets. The company targets
include earnings per share, cost control and global production. The weighting of the respective contribution of company and individual targets is
70% company and 30% individual. Failure to achieve safety improvement targets results in the reduction of bonuses for executive directors. Fifty
per cent of the bonus is paid in cash and 50% in the awarding of rights to acquire shares. The awards have a three-year vesting period.

LTIP: Executive directors are granted the right to acquire shares of value equivalent to their annual salaries, subject to the achievement of stretched
company performance targets over a three-year period. These targets are based on the performance of EPS and TSR, whereby the company will
need to outperform its gold company peers consistently.

Additionally, strategic business objectives will also need to be met. The first tranche of LTIP awards was made to executive directors in 2005.

Pensions: All executive directors who are South African citizens, are members of the AngloGold Ashanti Pension Fund, a defined benefit fund
which guarantees a pension on retirement equivalent to 2% of final salary per year of service. All executive directors who are not South African
citizens have other retirement benefit plans, albeit that the company contributes to such plans, to the same extent as provided for their South
African citizen peers. Death and disability cover reflects best practice amongst comparable employers in South Africa.

Other benefits: Executive directors are members of an external medical aid scheme, which covers the director and his immediate family.

Remuneration report

113

REMUNERATION REPORT

114

Directors’ service contracts

Service contracts of executive directors are reviewed annually. The contractual notice period in respect of Bobby Godsell, as chief executive officer,

is 12 months, and for the other four executive directors, nine months. The contracts also deal with compensation if an executive director is dismissed

or if there is a material change in role, responsibilities or remuneration following a new shareholder assuming control (50% + 1 share) of the company.

Compensation in these circumstances is pegged at twice the notice period.

Executive directors’ and executive officers’ remuneration

Pre-tax

Appointed

Resigned

Per- Pension

gains

with

formance-

scheme

effect

related contri- Other

Sub options

All figures in R000

(4) (5)

from from

Salary

payments

(1)

butions

benefits

(2)

total

exercised

(3)

Total

Executive directors’ remuneration 2005

RM Godsell (chief executive officer)

5,951

1,891

867

650

9,359

3,627

12,986

JG Best

31/07/05

1,837

–

270

170

2,277

1,757

4,034

R Carvalho Silva

01/05/05

3,079

939

607

120

4,745

–

4,745

DL Hodgson

30/04/05

1,047

–

154

1,209

799

2,008

Dr SE Jonah

(6)

01/08/05

2,744

–

351

596

3,691

–

3,691

NF Nicolau

01/05/05

2,226

939

330

3,524

–

3,524

S Venkatakrishnan

01/08/05

1,619

1,055

188

–

2,862

–

2,862

KH Williams

3,258

960

481

2,208

6,907

587

7,494

21,761

5,784

3,248

3,781

34,574

6,770

41,344

Executive officers’ remuneration 2005

Representing 18 executive officers

(5) (7)

25,311

4,662

3,553

3,561

37,087

1,442

38,529

Total executive directors and executive

officers remuneration – 2005

47,072

10,446

6,801

7,342

71,661

8,212

79,873

Executive directors’ remuneration 2004

RM Godsell (chief executive officer)

5,641

2,002

825

162

8,630

–

8,630

JG Best

2,983

1,758

440

169

5,350

–

5,350

DL Hodgson

2,983

958

440

4,426

–

4,426

Dr SE Jonah

01/06/04

2,967

918

–

318

4,203

–

4,203

KH Williams

3,089

836

458

104

4,487

7,179

11,666

Total

17,663

6,472

2,163

798

27,096

7,179

34,275

Executive officers’ remuneration 2004

Representing 13 executive officers

(8)

16,131

5,553

2,094

1,377

25,155

2,178

27,333

Total executive directors and executive

officers remuneration – 2004

33,794

12,025

4,257

2,175

52,251

9,357

61,608

Rounding may result in computational differences.

(1)

In order to more accurately disclose remuneration received/receivable by Executive Directors and Executive Officers, the tables above include the performance-related payments calculated on the year's financial results.

(2)

Includes health care, leave encashment, personal travel and relocation expenses. In 2005, AngloGold Ashanti altered its policy regarding the number of leave days that may be accrued. As a result, surplus leave days accrued were compulsorily encashed.

(3)

Excludes pre-tax gains on share options exercised by Messrs Best and Hodgson (18,900 shares and 36,000 shares respectively) post the period in which they held office, and in respect of 4,000 shares exercised by executive officers pre-appointment to office. Mr Godsell purchased AngloGold Ashanti shares in his own name, using the after tax gains from share options exercised.

(4)

Salaries are disclosed only for the period from or to which, office is held.

(5)

Messrs Carvalho Silva, Nicolau and Venkatakrishnan, formerly executive officers of the company, were appointed to the board of directors with effect from dates shown. Remuneration therefore has been split according to category as earned.

(6)

Dr Jonah resigned as an executive director of the company, but remains a non-executive director.

(7)

In 2005, the emoluments, in whole or in part, in respect of 18 executive officers are aggregated. Movements as follows:
• Three executive officers were appointed to the board of directors, two effective on 1 May 2005 and one effective 1 August 2005.
• Five additional executive officers were appointed, all the result of internal promotions, two effective 1 May 2005 and one each effective 1 June 2005, 1 July 2005 and 1 November 2005.
• Two executive officers resigned from the company, one effective 31 August 2005 and the other on 31 December 2005.
Emoluments have only been disclosed from the various effective dates, except for performance related payments to be made in 2006 pertaining to 2005 results which reflects total amount to be paid.

(8)

In 2004, of the 13 executive officers, five were promoted effective 1 May 2004; two were employed effective 1 July 2004; and one was promoted effective 1 December 2004 – emoluments have only been
disclosed from the various effective dates, except for performance-related payments made in 2005 pertaining to the 2004 results which reflects the total amount paid.

REMUNERATION REPORT

115

Non-executive directors’ remuneration

The following table details fees and allowances paid to non-executive directors:

All figures stated

2005

2004

(1)

to the nearest

Directors’

Committee

Travel

(2)

Directors’

Committee

Travel

(2)

R000 fees

fees

allowance

Total

fees

allowance

Total

RP Edey (chairman)

832 200 102

1,134 602

150

827

Dr TJ Motlatsi

(deputy chairman)

300 160

– 460 250

123

–

373

FB Arisman

102 170 77 349 99

123

274

Mrs E le R Bradley

110 190

– 300 107

137

–

244

CB Brayshaw

(3)

110 150

– 260

107

115

–

222

Dr SE Jonah* (president)

(effective 1 August 2005)

46 43 – 89 –

–

AW Lea (resigned

31 July 2005)

59 23 51

133

101

151

R Médori (effective

1 August 2005)

44 17 – 61

–

WA Nairn

110 130

– 240 107

123

–

230

NF Oppenheimer

(resigned 29 April 2004)

– – – –

–

J Ogilvie Thompson

(resigned 29 April 2004)

– – – –

–

SR Thompson (effective

30 April 2004)

102 80 102 284

126

AJ Trahar

110 80 –

190

107

–

144

PL Zim (effective

30 April 2004)

110 80 –

190

–

106

Total – non-executive

directors

2,035 1,323 332 3,690 1,686

931

166

2,783

Alternates

DD Barber

– – – – – – – –

AH Calver

– – – – – – – –

PG Whitcutt

– – – – – – – –

Total – alternate directors

– – – – – – – –

Grand total

2,035 1,323 332 3,690 1,686

931

166

2,783

* Dr Jonah resigned as an executive director with effect 31 July 2005, but remains a non-executive director.

Rounding may result in computational differences

(1)

At the annual general meeting of shareholders held on 29 April 2004, shareholders approved an increase in directors' fees with effect from 1 May 2004 as follows:

–

Chairman

–

$130,000 (to 30 April 2004: R200,000) per annum

–

Deputy chairman

–

R300,000 (to 30 April 2004: R150,000) per annum

–

South African resident directors

–

R110,000 (to 30 April 2004: R100,000) per annum

–

Non-resident directors

–

$16,000 (to 30 April 2004: R100,000) per annum

(2)

A payment of a travel allowance of $4,000 (effective 1 May 2004) or $2,000 prior to this date, per meeting is made to non-executive directors who travel internationally to attend board meetings. In addition, AngloGold Ashanti is liable for the payment of all travel costs.

(3)

In addition, Mr Brayshaw was paid a fee of R18,000 (2004: R15,000) by AGRe Insurance Company Limited, a wholly-owned subsidiary, as chairman of its audit committee.

Executive directors do not receive payment of directors' fees or committee fees.

At the annual general meeting to be held on Friday, 5 May 2006, shareholders will be requested to consider an ordinary resolution approving the
remuneration payable to the president of the company, including his remuneration as a director, to be fixed at R300,000 per annum. This proposal
arises from the office of the president becoming non-executive.

REMUNERATION REPORT

116

Share incentive schemes

Options and rights to subscribe for ordinary shares in the company granted to, and exercised by, executive directors, executive officers and other managers
during the year to 31 December 2005 and subsequent to year-end.

Executive directors, executive officers and other managers

RM Godsell **

JG Best

R Carvalho Silva

DL Hodgson

Balance as at 1 January 2005 *
Number

224,300

70,800

38,600

92,600

Average exercise price per share

– R

137.31

180.98

239.96

171.60

Granted during the year
Number

40,535

–

16,215

–

Average exercise price per share

– R

197.50

–

197.50

–

Exercised during the year
Number

25,100

37,800

–

33,600

Average exercise price per share

– R

104.00

121.76

–

113.64

Average market price per share
at date of exercise

– R

248.50

225.96

–

249.58

Pre-tax gain at date of exercise
Value

– R

3,626,950

3,938,793

–

4,567,344

Average per share

– R

144.50

104.20

–

135.93

Lapsed during the year
Number

– 33,000

–

Average exercise price per share

– R

–

248.81

–

Held at 31 December 2005
Number

239,735

–

54,815

59,000

Average exercise price per share granted

– R

150.97

–

227.40

204.61

Latest expiry date

4 May 2015

Issued subsequent to year-end to 31 January 2006
Granted
Number

– – –

–

Average exercise price per share

– R

–

Exercised
Number

– – –

10,000

Average exercise price per share

– R

–

159.10

Average market price per share at
date of exercise

– R

–

334.51

Pre-tax gain at date of exercise
Value

– R

–

1,754,123

Average per share

– R

–

175.41

Lapsed
Number

–

Average exercise price per share

– R

–

Held at 31 January 2006
Number

239,735

–

54,815

49,000

Average exercise price per share granted

– R

150.97

–

227.40

213.89

No prior year adjustments
* Movement in balance at 1 January 2005:

Number of shares

Average price per share (R)

From Total other to Total executive officers

88,600

202.18

From Total executive officers to Total directors

79,600

215.43

** R M Godsell purchased AngloGold Ashanti shares in his own name, using the after tax proceeds from the sale of shares acquired on the exercise of options.

Of the 4,397,155 options or rights granted and outstanding at 31 December 2005, 758,150 options at an average exercise price of R124.12 had vested.

REMUNERATION REPORT

117

Total

executive Total

incentive

SE Jonah

NF Nicolau

S Venkatakrishnan

KH Williams

directors

officers*

other*

scheme

50,000

41,000

–

59,000

576,300

339,860

3,900,800

4,816,960

221.00 192.34

–

177.94 170.39

189.89 220.92 212.69

–

15,635

14,865

4,230

91,480

92,885

468,050

652,415

–

197.50

–

5,000

101,500 17,000 357,038 475,538

–

104.00

113.80

124.00

130.41

126.64

–

221.30

217.78

226.22

264.23

252.95

–

586,500 12,719,588 1,737,671 47,778,330 62,235,589

–

117.30

125.32

102.22

133.82

130.87

50,000

–

83,000

13,410 500,272 596.682

221.00

–

232.06 239.70 235.39 235.02

–

56,635

14,865

58,230

483,280

402,335

3,511,540

4,397,155

– 193.77 197.50

185.71

176.82

192.77

224.94

216.71

4 May 2015

–

– –

–

10,000 –

100,100

110,100

–

159.10

–

127.88

130.72

–

– 334.51

– 328.68 329.21

–

1,754,123

–

20,100,243

21,854,366

–

– 175.41

– 200.80 198.50

–

56,635

14,865

58,230

473,280

402,335

3,411,440

4,287,055

–

193.77

197.50

185.71

177.19

192.77

227.79

218.92

Directors’ report

118

Nature of business

AngloGold Ashanti Limited conducts mining operations in Africa, North and South America and Australia and undertakes exploration activities
worldwide. In addition, the company is involved in the manufacturing, marketing and selling of gold products, as well as the development of markets
for gold.

Holding company

The company's holding and ultimate holding companies are respectively:
– Anglo South Africa Capital (Proprietary) Limited
– Anglo American plc (incorporated in England and Wales)

The effective shareholding of Anglo American plc in the issued share capital of the company at the undermentioned dates was as follows:

31 January

31 December

2006

2005

2004

Ordinary shares held
Number

134,788,099

134,788,099

134,788,099

Percentage

50.85

50.88

50.97

On 26 October 2005 Anglo American plc announced that it intended to provide the company with greater flexibility to pursue its strategy and that it
intended to reduce its shareholding in the company, while still intending to remain a significant shareholder in the medium term. In a responding
announcement the company welcomed this decision. On 22 February 2006, Anglo American plc announced that it would reduce its percentage
ownership in AngloGold Ashanti through a proposed public secondary offering. The effect of the offering may result in a reduction in the number of
members affiliated with Anglo American plc on the board of AngloGold Ashanti.

Share capital

There was no change to the authorised share capital of the company during 2005. The authorised ordinary share capital of AngloGold Ashanti is
R100m in 400m shares of 25 South African cents each.

The following are the movements in the issued and unissued ordinary share capital from the beginning of the accounting period to the date of this
report:

Issued shares

2005

2004

Number Number

of shares

Rand

of shares

Rand

At 1 January

264,462,894 66,115,724

223,136,342 55,784,086

Issues during year
Issued in terms of business combination with Ashanti Goldfields Company Limited

–

41,133,752

10,283,438

Exercise of options by participants in the AngloGold Share Incentive Scheme

475,538

118,884

192,800 48,200

At 31 December

264,938,432 66,234,608

264,462,894 66,115,724

Issued subsequent to year-end
Exercise of options by participants in the AngloGold Share Incentive Scheme

110,100

At 31 January 2006

265,048,532

The A and B redeemable preference shares, all of which are held by a wholly-owned subsidiary Eastvaal Gold Holdings Limited, and which may not
be transferred and are redeemable from the realisation of the assets relating to the Moab Lease area after cessation of mining operations in the area.
The shares carry the right to receive dividends equivalent to the profits (net of royalty, ongoing capital expenditure and taxation) from operations in
the area.

Further details of the authorised and issued shares, as well as the share premium, are given in Note 28 to the group's financial statements.

DIRECTORS’ REPORT

119

Unissued shares

2005

2004

Number of shares

At 1 January

135,537,106

176,863,658

Issues during year

475,538

41,326,552

Gross unissued shares at 31 December

135,061,568

135,537,106

Issues subsequent to year-end

110,100

Gross unissued shares at 31 January 2006

134,951,468

Maximum number of shares set aside in terms of specific authorities

granted by shareholders for purposes of:

– the Share Incentive Scheme

7,288,834

– the 2.375% guaranteed convertible bonds

15,384,615

Net unissued shares at 31 January 2006

112,278,019

Unissued shares under the control of directors

In terms of the authority granted by shareholders at the annual general meeting held on 29 April 2005, 10% of the authorised but unissued ordinary

share capital remaining at that date, after setting aside so many ordinary shares as may be required to be allotted and issued pursuant to the Share

Incentive Scheme and for the purposes of the conversion of the $1 billion, 2.375% guaranteed convertible bonds, issued by AngloGold Ashanti

Holdings plc, are placed under the control of the directors. This authority expires at the next annual general meeting.

The unissued shares under the control of the directors at 31 December 2005 were as follows:

Shares Rand

Authorised share capital

400,000,000 100,000,000

Shares in issue at 29 April 2005

264,527,894

66,131,974

Unissued shares at 29 April 2005

135,472,106

33,868,026

Less: Shares set aside in terms of:

– Share Incentive Scheme

7,274,517

1,818,629

– Guaranteed Convertible Bonds

15,384,615 3,846,154

Net unissued shares at 29 April 2005

112,812,974

28,203,243

Unissued shares under the control of the directors

at 29 April 2005 (10% of net unissued shares)

11,281,297

2,820,324

Less: Shares issued at the discretion of the directors

–

At 31 December 2005

11,281,297

2,820,324

In terms of the Listings Requirements of the JSE, shareholders may, subject to certain conditions, authorise the directors to issue the shares held under

their control for cash other than by means of a rights offer to shareholders. In order that the directors of the company may be placed in a position to take

advantage of favourable circumstances which may arise for the issue of such shares for cash, without restriction, for the benefit of the company,

shareholders will be asked to consider an ordinary resolution to this effect at the forthcoming annual general meeting.

The company has not exercised the general approval to buy back shares from its issued ordinary share capital, granted at the annual general meeting

held on 29 April 2005. At the next annual general meeting shareholders will be asked to renew the general authority for the acquisition by the

company, or a subsidiary of the company, of its own shares.

DIRECTORS’ REPORT

120

American Depositary Shares

At 31 December 2005, the company had in issue through The Bank of New York as Depositary, and listed on the New York Stock Exchange (NYSE),

48,702,313 (2004: 45,217,297) American Depositary Shares (ADSs). Each ADS is equal to one ordinary share.

At 31 January 2006, there were 48,093,545 ADSs in issue and listed on the NYSE.

Ghanaian Depositary Shares

At 31 December 2005, the company had in issue through NTHC Limited as Depositary, and listed on the Ghana Stock Exchange (GSE), 21,848,600

(2004: 22,246,200) Ghanaian Depositary Shares (GhDSs). Every 100 GhDSs has one underlying AngloGold Ashanti ordinary share and carries the

right to one vote. There has been no change since 31 December 2005.

AngloGold Share Incentive Scheme

AngloGold Ashanti operates a share incentive scheme for the purpose of providing an incentive to executive directors, executive officers and

managers of the company and its subsidiaries to identify themselves more closely with the fortunes of the group and its continued growth, and to

promote the retention of such employees by giving them an opportunity to acquire shares in the company. Non-executive directors are not eligible

for participation in the share incentive scheme.

The maximum number of ordinary shares that may be allocated for the purposes of the scheme is equivalent to 2.75% of the total number of ordinary

shares in issue at any time, while the maximum aggregate number of shares which may be acquired by any one participant in the scheme is 5% of

the ordinary shares allocated for the purposes of the share incentive scheme (or 0.1375% of the total number of ordinary shares in issue) at any

one time.

Employees participate in the share incentive scheme to the extent that they are granted options or rights to acquire shares, (rights), and accept them.

All options or rights which have not been exercised within ten years from the date on which they were granted, automatically expire.

The incentives offered by AngloGold Ashanti are reviewed periodically to ensure that these incentives are globally competitive, so as to attract, reward

and retain management of the highest calibre. As a result, several types of incentives, each with their own issue and vesting criteria have been granted

to employees – collectively known as the “AngloGold Share Incentive Scheme or share incentive scheme”.

Although the Remuneration Committee has the discretion to incentivise employees through the issue of shares, only options or rights have so far

been granted. The type and vesting criteria of the options or rights granted are:

Time-related

The granting of time-related options was approved by shareholders at the general meeting held on 4 June 1998 and amended by shareholders at the

annual general meeting held on 30 April 2002, at which time it was agreed that no further time-related options will be granted and all options granted

hereunder will terminate on 1 February 2012, being the date on which the last options granted under this criteria may be exercised or will expire.

Time-related options vest over a five-year period from date of grant and may be exercised in tranches of 20% each in years two, three and four and

40% in year five.

Performance-related

The granting of performance-related options was approved by shareholders at the annual general meeting held on 30 April 2002 and amended at

the annual general meeting held on 29 April 2005 at which time it was agreed that no further performance-related options will be granted and all

options granted hereunder will terminate on 1 November 2014, being the date on which the last options granted under this criteria may be exercised

or will expire.

Performance-related options granted vest in full, three years after date of grant, provided that the conditions under which the options were granted,

are met.

DIRECTORS’ REPORT

121

Bonus Share Plan (BSP)

The granting of rights in terms of the BSP was approved by shareholders at the annual general meeting held on 29 April 2005. Executive directors,

executive officers and other management groups are eligible for participation. Each award made in respect of the BSP entitles the holder to acquire

one ordinary share at “nil” cost. Awards granted vest in full, three years after date of grant, provided that the participant is still in the employ of the

company at the date of vesting unless an event, such as death, occurs which may result in an earlier vesting.

Long-Term Incentive Plan (LTIP)

The granting of rights in terms of the LTIP was approved by shareholders at the annual general meeting held on 29 April 2005. Executive directors,

executive officers and selected senior management are eligible for participation. Each award made in respect of the LTIP entitles the holder to acquire

one ordinary share at “nil” cost. Awards granted vest three years after date of grant, to the extent that the stretched company performance targets

under which the rights were granted, are met and provided that the participant is still in the employ of the company, or unless an event, such as death,

occurs which may result in an earlier vesting.

The AngloGold Share Incentive Scheme is summarised as follows:

The maximum number of ordinary shares that may be allocated for purposes of the scheme, equivalent to 2.75% of the total number of ordinary

shares in issue at that date, is:

31 January 2006

31 December 2005

31 December 2004

7,288.834

7,285,807

7,272,730

The maximum aggregate number of ordinary shares which may be acquired by any one participant in the share incentive scheme at that date is:

31 January 2006

31 December 2005

31 December 2004

364,442

364,291

363,637

As is required to be disclosed in terms of the AngloGold Share Incentive Scheme and stock exchange regulations, the movement in respect of options

and rights granted and the ordinary shares issued as a result of the exercise of options and rights during the year 1 January 2005 to 31 January 2006

is:

Options and rights

Average

exercise

Bonus Long-Term

price

per

Ordinary`

Time-

Performance-

Incentive

ordinary shares

Plan

Total

issued

At 1 January 2005

1,391,060

3,425,900

–

4,816,960

212.69

2,240,140

Movement during year

– Granted

–

283,915

368,500

652,415

197.50

–

– Exercised

471,950

3,300

288

–

475,538

126.64

475,538

– Lapsed – terminations

54,400

525,600

11,682

5,000

596,682

235.02

–

At 31 December 2005

864,710

2,897,000

271,945

363,500

4,397,155

216.71

2,715,678

Subsequent to year-end

– Exercised

110,100

–

110,100

130.72

110,100

– Lapsed – terminations

–

At 31 January 2006

754,610

2,897,000

271,945

363,500

4,287,055

130.72

2,825,778

DIRECTORS’ REPORT

122

Analysis of options and rights outstanding at 31 December 2005:

Holding

Total exercise

Holders

Number

price – R000

–

100

5,410

1,069

101

–

500

19,830

3,916

501

–

1,000

59,710

14,052

1,001

–

5,000

419

1,346,530

326,809

5,001

–

10,000

119

870,105

198,411

10,001

– 100,000

1,855,835

372,464

Over 100,000

239,735

36,193

Total

851

4,397,155

952,914

Financial results

The financial statements set out fully the financial position, results of operations and cash flows of the group and the company for the financial year

ended 31 December 2005. A synopsis of the financial results for the year is set out in the summarised group financial and operating results on

pages 12 to 15.

Review of operations

The performance of the various operations are comprehensively reviewed on pages 43 to 78.

Dividends

Dividend policy

Dividends are proposed and approved by the board of directors of AngloGold Ashanti, based on the interim and year-end financial performance.

Dividends are recognised when declared by the board of directors of AngloGold Ashanti. AngloGold Ashanti expects to continue to pay dividends,

although there can be no assurance that dividends will be paid in the future or as to the particular amounts that will be paid from year to year. The

payments of future dividends will depend upon the board’s ongoing assessment of AngloGold Ashanti’s earnings, financial condition, including its

cash needs, future earnings prospects and other factors.

Dividends declared since 1 January 2005

Final dividend

Interim dividend

Final dividend

number 97

number 98

number 99

Declaration date

26 January 2005

27 July 2005

9 February 2006

Last date to trade ordinary shares cum dividend

11 February 2005

12 August 2005

23 February 2006

Record date

18 February 2005

19 August 2005

3 March 2006

Amount paid per ordinary share

– South African currency (cents)

180

170

– United Kingdom currency (pence)

15.49

14.78

5.81

– Ghanaian currency (cedis)

2,683.08

2,381.75

920.02

Amount per CDI* – Australian currency (cents)

7.55

6.81

2.75

Payment date

25 February 2005

26 August 2005

10 March 2006

Amount per GhDS** – Ghanaian currency (cedis)

26.83

23.81

9.20

Payment date

28 February 2005

29 August 2005

13 March 2006

Amount per ADS*** – United States currency (cents)

30.37

26.09

10#

Payment date

7 March 2005

6 September 2005

20 March 2006

Rounding may result in computational differences

Each CDI (Chess Depositary Interest) is equal to one-fifth of one ordinary share

Each GhDS (Ghanaian Depositary Share) is equal to one-hundredth of one ordinary share

***

Each ADS (American Depositary Share) is equal to one ordinary share

Illustrative value. The actual rate of payment will depend on the exchange rate on approximately 10 March 2006

DIRECTORS’ REPORT

123

Shareholders on the South African register who have dematerialised their ordinary shares receive payment of their dividends electronically, as provided

for by STRATE. For those shareholders who have not yet dematerialised their shares, or who may intend retaining their shareholding in the company

in certificated form, the company operates an electronic funds transmission service, whereby dividends may be electronically transferred to

shareholders’ bank accounts. These shareholders are encouraged to mandate this method of payment for all future dividends.

Borrowings

The company’s borrowing powers are unlimited. As at 31 December 2005, the group’s borrowings totalled $1,894m, R12,015m (2004: $1,605m,

R9,062m).

On 19 February 2004, AngloGold announced the launch of an offering of $900m convertible bonds due 2009, subject to increase by up to $100m

pursuant to an option, by its wholly owned subsidiary, AngloGold Holdings plc. The bonds are guaranteed by AngloGold Ashanti. This was followed

by an announcement on 20 February 2004 which advised the pricing of the offering at 2.375%, while on 25 February 2004, AngloGold announced

that the bond managers had exercised the option to subscribe for additional bonds in a principal amount of $100m, increasing the offering to

$1 billion. The offer closed and was settled on 27 February 2004. The $1 billion remains outstanding.

On 27 January 2005 AngloGold Ashanti announced the signing of a new three-year $700m revolving credit facility to replace the $600m facility which

matured in February 2005. The new facility, which will be used for general corporate purposes, will reduce the group’s cost of borrowing with the

borrowing margin over LIBOR reducing from 70 basis points to 40 basis points. The facility was arranged with a number of AngloGold Ashanti’s local

and international relationship banks.

Significant announcements

On 27 January 2005, AngloGold Ashanti announced that the board of directors had approved a $121m expansion project at the company’s Cuiabá

mine in south-eastern Brazil. It is anticipated that commissioning will take place in December 2006, with full production by the end of the second

quarter of 2007. The expansion project would result in production increasing from 190,000oz/year to 250,000oz/year at an estimated cost of $169/oz

over the life of the project and would extend the life of mine profile by six years to 2019.

On 28 April 2005, the company announced that agreement had been reached with Trans-Siberian Gold plc (TSG) on revised terms for the second

subscription of shares in TSG, and a revised subscription price of £1.30 per share, compared to £1.494 per share agreed between the parties on

30 June 2004. The revised terms of the subscription were approved by TSG shareholders on 27 May 2005 and AngloGold Ashanti’s 17.5% equity

interest in TSG increased to 29.9% on 31 May 2005, the date on which the second subscription was completed.

On 29 April 2005, AngloGold Ashanti announced the conditional sale of exploration assets in the Laverton area in Australia, comprising the Sickle

royalty of $30 per ounce, the Child Harold prospect, various 100% AngloGold Ashanti Australia-owned interests including the Lord Byron and Fish

projects as well as its interests in the Jubilee, Black Swan and Jasper Hills Joint Ventures, to Crescent Gold Limited, for a total consideration of A$4m,

$3m, A$0.3m, $0.2m was payable on the execution of a binding sale and purchase agreement, A$1m, $0.8m is payable in Crescent Gold shares

and A$3m, $2m is payable in cash, on or before 15 December 2006.

On 19 July 2005, Aflease Gold and Uranium Resources Limited (Aflease) announced that it had purchased from AngloGold Ashanti, its Weltevreden

mine in an all script deal valued on 6 May 2005 at R75m, $11m. Subsequently, Aflease was acquired by sxr Uranium One Inc. Further details on this

transaction are given in note 27 to the group’s financial statements.

On 27 July 2005, AngloGold Ashanti reached an agreement with the government of Guinea to amend the Convention de Base (stability agreement)

and resolve all outstanding disputes for a sum of $7m, R45m. In addition, the company has agreed as part of this settlement to meet historical and

follow-up fees and costs of a consultant that the government retained to advise and assist it in its negotiations and resolution of the dispute. In

consideration of the above settlement, the government has irrevocably confirmed its waiver and abandonment of all claims and disputes of any nature

whatsoever against the AngloGold Ashanti group of companies.

On 11 August 2005, AngloGold Ashanti announced that it had disposed of its La Rescatada project for a total consideration of $12.5m, R84m with

an option to repurchase 60% of the project should reserves in excess of 2Moz be identified within three years. The exploration project is located

approximately 800 kilometres south-east of the city of Lima in Peru.

On 27 February 2006, AngloGold Ashanti announced that it had signed an agreement with China explorer, Dynasty Gold Corporation, to acquire an

effective 8.7% stake in that company, through a purchase of 5.75 million Dynasty units at a price of C$.40 each. Each until will consist of one common

share and one-half common share pruchase warrant, exercisable at a price of C$0.60 per unit for two years.

Investments

Particulars of the group’s principal subsidiaries and joint venture interests are presented on page 246.

DIRECTORS’ REPORT

124

Litigation

There are no legal or arbitration proceedings in which any member of the AngloGold Ashanti group is or has been engaged, including any such
proceedings which are pending or threatened of which AngloGold Ashanti is aware, which may have, or have had during the 12 months preceding
the date of this Annual Report 2005, a material effect on the group's financial position.

Material change

There has been no material change in the financial or trading position of the AngloGold Ashanti group since the publication of its results for the quarter
and year ended 31 December 2005.

Material resolutions

Details of special resolutions and other resolutions of a significant nature passed by the company and its subsidiaries during the year under review,
requiring disclosure in terms of the Listings Requirements of the JSE, are as follows:

Nature of resolution

Effective date

AngloGold Ashanti Limited

Passed at the annual general meeting held on 29 April 2005:
General approval for the acquisition by the company, or a
subsidiary of the company, of its own shares.

17 May 2005

Subsidiaries
AngloGold Brasil Ltda

Change of name to AngloGold Ashanti Brasil Ltda

3 January 2005

AngloGold Holdings plc

Adoption of New Memorandum and Articles of Association

2 September 2005

Change of name to AngloGold Ashanti Holdings plc

18 October 2005

Ashanti Exploration Limited

Change of name to AngloGold

18 February 2005

Ashanti Exploration (Ghana) Limited

Annual general meetings

At the 61st annual general meeting held on 29 April 2005, shareholders passed ordinary resolutions relating to:

•

the adoption of the annual report for the year ended 31 December 2004;

•

the re-election of Mr CB Brayshaw, Mr AW Lea, Mr WA Nairn and Mr KH Williams as directors of the company;

•

the election of Dr SE Jonah, Mr SR Thompson and Mr PL Zim, who were appointed since the previous annual general meeting, as directors of
the company;

•

the renewal of a general authority placing 10% of the unissued ordinary shares of the company, after setting aside sufficient shares attributable
to the Share Incentive Scheme and guaranteed convertible bonds, under the control of the directors;

•

the granting of a general authority to issue ordinary shares in the capital of the company for cash, subject to certain limitations in terms of the
Listings Requirements of the JSE; and

•

the approval of the introduction of the Long-Term Incentive Plan and the Bonus Share Plan.

Details concerning the special resolution passed by shareholders at this meeting are disclosed above.

Notice of the 62nd annual general meeting, which is to be held in Johannesburg at 11:00 on Friday, 5 May 2006, is enclosed as a separate document
with the Annual Report 2005. Additional copies of the notice of meeting may be obtained from the company’s corporate contacts and the share
registrars or may be accessed from the company’s website.

Directorate and secretary

Mr DL Hodgson retired from the board on 29 April 2005 followed by Mr AW Lea and Mr JG Best both on 31 July 2005. On 1 May 2005 Messrs
R Carvalho Silva and NF Nicolau were appointed to the board. Mr R Médori and Mr S Venkatakrishnan were appointed on 1 August 2005.

The directors retiring by rotation at the forthcoming annual general meeting in terms of the articles of association are Mr FB Arisman,
Mrs E le R Bradley, Mr RP Edey, Mr RM Godsell and Dr TJ Motlatsi who, being eligible, offer themselves for re-election.

In addition to the abovementioned directors, Mr R Carvalho Silva, Mr NF Nicolau, Mr R Médori and Mr S Venkatakrishnan, who were appointed as
directors during the year, and Mr RE Bannerman, who was appointed a director on 10 February 2006, are due to retire at the annual general meeting
and offer themselves for election.

Non-executive directors do not hold service contracts with the company. Mr Godsell, who offers himself for re-election, holds a service contract with
the company, terminable on the giving of not less than 12 months’ notice.

The names of the directors and alternate directors of the company in office at the date of this report are listed on pages 23 and 24.

Biographies of the board of directors appear on pages 23 and 24.

There has been no change in the offices of managing secretary and company secretary whose names and business and postal addresses are set
out on page 268 of this report.

DIRECTORS’ REPORT

125

Directors’ interests in shares

The interests of the directors and alternate directors in the ordinary shares of the company at 31 December 2005, which did not individually exceed
1% of the company's issued ordinary share capital, were:

31 December 2005

31 December 2004

Beneficial

Non-

Direct

Indirect

beneficial

(¹⁾

Direct Indirect

beneficial

(1)

Executive directors
JG Best (retired 1 August 2005)

–

– – –

R Carvalho Silva (appointed 1 May 2005)

–

RM Godsell

9,177

–

460 – –

DL Hodgson (retired 29 April 2005)

–

– 430

–

Dr SE Jonah (until 31 July 2005)

–

6,297 – –

NF Nicolau (appointed 1 May 2005)

100

–

S Venkatakrishnan (appointed 1 August 2005)

652

–

KH Williams

–

920

–

– 920

–

Total

9,929

920

–

6,757 1,350

–

Non-executive directors
FB Arisman

–

2,000

–

– 2,000

–

Mrs E le R Bradley

–

23,423

13,027

– 23,423 26,027

CB Brayshaw

–

– – –

RP Edey

–

1,000

–

– 1,000

–

Dr SE Jonah (from 1 August 2005)

6,297 –

– –

–

AW Lea (retired 1 August 2005)

–

– – –

R Médori (appointed 1 August 2005)

–

– –

Dr TJ Motlatsi

–

– – –

WA Nairn

–

– – –

SR Thompson

–

– – –

AJ Trahar

–

– – –

PL Zim

–

– – –

Total

6,297

26,423

13,027

– 26,423 26,027

Alternate directors
DD Barber

–

– – –

AH Calver

–

– 46 –

PG Whitcutt

–

– – –

Total

–

– 46 –

Grand total

16,226

27,389

13,027

6,757 27,819 26,027

(1)

The director derives no personal benefit.

There have been no changes in the above interests since 31 December 2005 and Mr R E Bannerman, who was appointed a director on 10 February
2006, holds no interest in the company’s ordinary shares.

A register detailing directors’ and officers’ interests in contracts is available for inspection at the company’s registered and corporate office.

DIRECTORS’ REPORT

126

Annual financial statements

The directors are required by the South African Companies Act to maintain adequate accounting records and are responsible for the preparation of

the annual financial statements which fairly present the state of affairs of the company and the AngloGold Ashanti group at the end of the financial

year, and the results of operations and cash flows for the year, in conformity with Generally Accepted Accounting Practice (GAAP) and in terms of the

JSE Listings Requirements.

In preparing the annual financial statements reflected in dollars and South African rands on pages 128 to 245, the group has complied with

International Financial Reporting Standards (IFRS) and has used appropriate accounting policies supported by reasonable and prudent judgements

and estimates. The directors are of the opinion that these financial statements fairly present the financial position of the company and the group at

31 December 2005, and the results of their operations and cash flow information for the year then ended.

AngloGold Ashanti, through its executive committee and treasury committee, reviews its short-, medium- and long-term funding, treasury and liquidity

requirements and positions monthly. The board of directors also reviews these on a quarterly basis at its meetings.

Cash and cash equivalents at 31 December 2005 amounted to $209m, R1,328m, together with cash budgeted to be generated from operations in

2006 and the net incremental borrowing facilities available are, in management’s view, adequate to fund operating, mine development and capital

expenditure and financing obligations as they fall due for at least the next twelve months. Taking these factors into account, the directors of AngloGold

Ashanti have formed the judgement that, at the time of approving the financial statements for the year ended 31 December 2005, it is appropriate to

use the going concern basis in preparing these financial statements.

The external auditors, Ernst & Young, are responsible for independently auditing and reporting on the financial statements in conformity with

International Standards of Auditing and the Companies Act in South Africa. Their unqualified report on these financial statements appears on

page 112.

To comply with requirements for reporting by non-US companies registered with the SEC, the company has prepared a set of financial statements in

accordance with US Generally Accepted Accounting Principles (US GAAP) which will be available from The Bank of New York to holders of the

company’s securities listed in the form of American Depositary Shares on the NYSE. Copies of the annual report on Form 20-F, which must be filed

with the SEC by no later than 30 June 2006, will be available to stakeholders and other interested parties upon request to the company’s corporate

office or its contacts as listed on page 268 of this report.

Under the Sarbanes-Oxley Act, the chief executive officer and chief financial officer are required to complete a group certificate stating that the financial

statements and reports are not misleading and that they fairly present the financial condition, results of operations and cash flows in all material

respects. The design and effectiveness of the internal controls, including disclosure controls, are also included in the declaration. As part of the

process, a declaration is also made that all significant deficiencies and material weaknesses, fraud involving management or employees who play a

significant role in internal control and significant changes that could impact on the internal control environment, are disclosed to the Audit and

Corporate Governance Committee and the board.

Group financial statements

Income statement

128

Balance sheet

129

Cash flow statement

130

Statement of recognised

income and expense

131

Notes to the financial statements

132

Company financial statements

Income statement

220

Balance sheet

221

Cash flow statement

222

Statement of recognised income

and expense

223

Notes to the financial statements

224

Investment in principal subsidiaries

and joint venture interests

246

Glossary of terms

247

Annual financial statements contents

127

GROUP FINANCIAL STATEMENTS

for the year ended 31 December

Income statement

128

15,592

17,388

Revenue

2,730

2,434

14,788

16,750

Gold income

2, 3

2,629

2,309

(12,305)

(14,713)

Cost of sales

(2,311)

(1,924)

(786)

(949)

Non-hedge derivative loss

(135)

(142)

1,697

1,088

Gross profit

183

243

(331)

(410)

Corporate administration and other expenses

(64)

(51)

(100)

(84)

Market development costs

(13)

(15)

(283)

(288)

Exploration costs

(45)

(44)

(200)

–

Amortisation of goodwill

18, 19

–

(31)

(69)

(127)

Other net operating expenses

(20)

(12)

(499)

Operating special items

(77)

794

(320)

Operating (loss) profit

(36)

102

318

155

Interest received

(29)

Exchange (loss) gain

(5)

160

(211)

Fair value adjustment on option component of convertible bond

(32)

Finance costs and unwinding of decommissioning and

(563)

(690)

restoration obligations

(108)

(87)

(5)

Fair value (loss) gain on interest rate swaps

(1)

(17)

Share of associates (loss) profit

(3)

–

745

(1,117)

(Loss) profit before taxation

(160)

179

220

Taxation

924

(897)

(Loss) profit after taxation from continuing operations

(124)

138

Discontinued operations

(73)

(219)

Loss for the year from discontinued operations

(36)

(11)

851

(1,116)

(Loss) profit for the year

(160)

127

Allocated as follows

728

(1,262)

Equity shareholders of the parent

(183)

108

123

146

Minority interest

851

(1,116)

(160)

127

Basic (loss) earnings per ordinary share (cents)

319

(394)

(Loss) profit from continuing operations

⁽¹⁾

(56)

(29)

(83)

Loss from discontinued operations

⁽¹⁾

(14)

(4)

290

(477)

(Loss) profit

(69)

Diluted (loss) earnings per ordinary share (cents)

318

(394)

(Loss) profit from continuing operations

⁽²⁾

(56)

(29)

(83)

Loss from discontinued operations

⁽²⁾

(14)

(4)

289

(477)

(Loss) profit

(69)

Dividends

⁽³⁾

350

232

Dividends declared per ordinary share (cents)

(1)

Calculated on the basic weighted average number of ordinary shares.

(2)

Calculated on the diluted weighted average number of ordinary shares.

(3)

Dividends are translated at actual rates on date of payment.
The current period is an indicative amount only.

Rounding of figures may result in computational discrepancies.

2004

2005

Figures in million

Notes

2005

2004

SA Rands

US Dollars

GROUP FINANCIAL STATEMENTS

as at 31 December

Balance sheet

129

ASSETS

Non-current assets

33,239

37,464

Tangible assets

5,905

5,888

2,458

2,533

Intangible assets

399

435

223

Investments in associates

608

645

Other investments

102

107

202

1,182

Inventories

186

1,055

243

Derivatives

187

124

Trade and other receivables

–

279

Deferred taxation

–

101

Other non-current assets

37,761

42,794

6,745

6,688

Current assets

2,285

2,436

Inventories

384

406

1,700

1,589

Trade and other receivables

250

302

2,767

4,280

Derivatives

675

490

Current portion of other non-current assets

148

Cash restricted for use

1,630

1,328

Cash and cash equivalents

209

289

8,535

9,728

1,533

1,514

–

100

Non-current assets held for sale

–

8,535

9,828

1,549

1,514

46,296

52,622

Total assets

8,294

8,202

EQUITY AND LIABILITIES

18,987

19,047

Share capital and premium

3,002

3,364

(1,197)

(2,463)

Retained earnings and other reserves

(388)

(213)

17,790

16,584

Shareholders' equity

2,614

3,151

327

374

Minority interests

18,117

16,958

Total equity

2,673

3,209

Non-current liabilities

7,262

10,825

Borrowings

1,706

1,286

1,294

2,265

Environmental rehabilitation and other provisions

356

230

1,112

1,249

Provision for pension and post-retirement benefits

197

Trade, other payables and deferred income

3,033

2,460

Derivatives

388

537

7,653

7,353

Deferred taxation

1,159

1,356

20,375

24,239

3,820

3,610

Current liabilities

2,629

2,711

Trade, other payables and deferred income

427

466

1,800

1,190

Current portion of borrowings

188

319

3,007

6,814

Derivatives

1,074

533

368

710

Taxation

112

7,804

11,425

1,801

1,383

28,179

35,664

Total liabilities

5,621

4,993

46,296

52,622

Total equity and liabilities

8,294

8,202

Rounding of figures may result in computational discrepancies.

2004

2005

Figures in million

Notes

2005

2004

SA Rands

US Dollars

GROUP FINANCIAL STATEMENTS

for the year ended 31 December

Cash flow statement

130

Cash flows from operating activities

15,023

17,175

Receipts from customers

2,707

2,332

(11,501)

(12,742)

Payments to suppliers and employees

(2,008)

(1,744)

3,522

4,433

Cash generated from operations

699

588

(12)

(188)

Cash utilised by discontinued operations

(31)

(2)

(113)

(104)

Environmental, rehabilitation and other expenditure

(16)

(18)

–

(61)

Termination of employee benefit plan

(10)

–

(218)

(188)

Taxation paid

(30)

(34)

3,179

3,892

Net cash inflow from operating activities

612

534

Cash flows from investing activities

Capital expenditure

(1,645)

(1,721)

– project expenditure

(270)

(256)

(2,119)

(2,879)

– stay-in-business expenditure

(452)

(329)

Proceeds from disposal of tangible assets

–

Proceeds from disposal of discontinued assets

–

(196)

(83)

Other investments acquired

(12)

(30)

–

(93)

Associate acquired

(15)

–

Proceeds from disposal of investments

–

(1,523)

–

Net acquisition of subsidiaries

–

(227)

384

–

Cash in the subsidiary acquired

–

(45)

112

Cash restricted for use

(6)

236

113

Interest received

(13)

(45)

Loans advanced

(7)

(2)

539

Repayment of loans advanced

(703)

(415)

Utilised in hedge restructure

(69)

(123)

(5,016)

(4,886)

Net cash outflow from investing activities

(771)

(785)

Cash flows from financing activities

Proceeds from issue of share capital

(1)

–

Share issue expenses

–

7,236

4,194

Proceeds from borrowings

659

1,077

(5,348)

(2,183)

Repayment of borrowings

(343)

(818)

(465)

(471)

Finance costs

(74)

(72)

(1,322)

(1,051)

Dividends paid

(169)

(198)

228

–

Proceeds from hedge restructure

–

350

549

Net cash inflow from financing activities

(1,487)

(445)

Net decrease in cash and cash equivalents

(77)

(219)

(186)

143

Translation

(3)

3,303

1,630

Cash and cash equivalents at beginning of year

289

495

1,630

1,328

Net cash and cash equivalents at end of year

209

289

Rounding of figures may result in computational discrepancies.

2004

2005

Figures in million

Notes

2005

2004

SA Rands

US Dollars

GROUP FINANCIAL STATEMENTS

for the year ended 31 December

Statement of recognised income and expense

131

(15)

(173)

Actuarial loss on defined benefit retirement plans

(1)

(note 29)

(27)

(3)

Net loss on cash flow hedges removed from equity and reported

867

391

in income (notes 29 and 30)

134

236

(1,281)

Net (loss) gain on cash flow hedges (notes 29 and 30)

(202)

Gain on available-for-sale financial assets (note 29)

(286)

445

Deferred taxation on items above (note 29)

(42)

–

Share-based payment expense (note 29)

–

At acquisition of subsidiary (note 30)

–

(2,657)

1,534

Net exchange translation differences (note 29)

293

(439)

(1,825)

948

Net income (expense) recognised directly in equity

155

(297)

851

(1,116)

(Loss) profit for the year

(160)

127

(974)

(168)

Total recognised expense for the year

(5)

(170)

Attributable to:

(1,072)

(340)

Equity shareholders of the parent

(26)

(194)

172

Minority interest

(974)

(168)

(5)

(170)

(1)

The cumulative effect of the actuarial gains and losses accounted through equity is

a net reduction of $36m, R227m (2004: $22m, R122m) in reserves after deferred

taxation of $22m, R131m (2004: $11m, R63m).

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

132

1. Accounting policies

Statement of compliance

The consolidated financial statements are prepared in compliance with International Financial Reporting Standards (IFRS) and Interpretations of

those standards, as adopted by the International Accounting Standards Board (IASB) and applicable legislation.

During the current financial year, the following new and revised accounting standards were adopted by AngloGold Ashanti:

IAS 1

Presentation of financial statements;

IAS 2

Inventories;

IAS 8

Accounting policies, changes in accounting estimates and errors;

IAS 10

Events after the balance sheet date;

IAS 16

Property, plant and equipment;

IAS 17

Leases;

IAS 21

The effects of changes in foreign exchange rates;

IAS 24

Related party disclosures;

IAS 27

Consolidated and separate financial statements;

IAS 28

Investments in associates;

IAS 31

Interests in joint ventures;

IAS 32

Financial instruments: disclosure and presentation;

IAS 33

Earnings per share;

IAS 36

Impairment of assets;

IAS 38

Intangible assets;

IAS 39

Financial instruments: recognition and measurement

IAS 39

Amendment – transition and initial recognition of financial assets and financial liabilities.

IFRS 2

Share based payment;

IFRS 3

Business combinations;

IFRS 4

Insurance contracts;

IFRS 5

Non-current assets held for sale and discontinued operations; and

IFRIC 1

Changes in existing decommissioning, restoration and similar liabilities.

In addition, the following new and revised accounting standards were early adopted by AngloGold Ashanti during the current financial year:

IAS 19

Amendment – actuarial gains and losses, group plans and disclosures;

IAS 21

Amendment – net investment in a foreign operation;

IAS 39

Amendment – the fair value option;

IAS 39

Amendment – cash flow hedge accounting of forecast intragroup transactions.

The following interpretation, which is not yet mandatory for AngloGold Ashanti, was adopted in the previous year:

IFRIC 5

Rights to interests arising from decommissioning, restoration and environmental rehabilitation funds.

Except for the matters referred to in 1.2 below, the adoption of the above identified accounting statements had no financial impact on the annual

financial statements.

The following accounting standards, which are not yet mandatory for AngloGold Ashanti, have not been adopted in the current year:

IAS 1

Amendment – capital disclosures (1 January 2007);

IAS 39 and IFRS 4 Amendment – financial guarantee contracts (1 January 2006);

IFRS 6

Exploration for and evaluation of Mineral Resources (1 January 2006);

IFRS 7

Financial instruments disclosures (1 January 2007);

IFRIC 4

Determining whether an arrangement contains a lease (1 January 2006).

We have assessed the significance of these new standards which will be applicable from 1 January 2006 and 1 January 2007 and concluded

that they will have no material financial impact.

1.1 Basis of preparation

The financial statements are prepared according to the historical cost accounting convention, as modified by the revaluation of certain financial

instruments to fair value. The group's accounting policies as set out below are consistent in all material respects with those applied in the previous

year, except for the change in accounting policy for the foreign currency convertible bond and for the adoption of the above mentioned new and

revised standards where the effects are disclosed in note 1.2.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

133

1. Accounting policies (continued)

1.1 Basis of preparation (continued)

AngloGold Ashanti presents its consolidated financial statements in South African rands and US dollars for the benefit of local and international

investors. The functional currency of a significant portion of the group’s operations is the South African rand. Other main subsidiaries have

functional currencies of US dollars and Australian dollars.

Basis of consolidation

The group financial statements incorporate the financial statements of the company, its subsidiaries and its proportionate interest in joint ventures.

The financial statements of subsidiaries, the Environmental Rehabilitation Trust Fund and joint ventures, are prepared for the same reporting period

as the holding company, using the same accounting policies, except for Rand Refinery Limited which reports on a three-month time lag.

Adjustments are made to the subsidiary financial results for material transactions and events in the intervening period.

Subsidiaries are all entities (including special purpose entities) over which the group has the power to govern the financial and operating policies

generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are

currently exercisable or convertible are considered when assessing whether the group controls another entity. Subsidiaries are fully consolidated

from the date on which control is transferred to the group. They are de-consolidated from the date on which control ceases.

Intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also

eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Subsidiaries are accounted for at cost and are adjusted for impairments where appropriate in the company financial statements.

1.2 Changes in accounting policies

The changes in accounting policies result from adoption of the following new/revised standards, except for foreign currency convertible bonds:

IFRS 2

Share-based payments

IFRS 3

Business combinations, IAS 36 (revised) Impairment of assets and IAS 38 (revised) Intangible assets

IFRS 5

Non-current assets held for sale and discontinued operations

IAS 19

Amendment – Actuarial gains and losses, group plans and disclosures

IAS 21

(revised) – The effects of changes in foreign exchange rates, and IAS 21 amendment – Net investment in foreign operation

Foreign currency convertible bonds

The principal effect of these changes in policies are discussed below.

IFRS 2 “Share-based payments”

The revised accounting policy for share-based payment transactions is described in the “Significant accounting policies”. The main impact of IFRS

2 on the group, is the recognition of an expense and a corresponding entry to equity for employees’ share options and awards. The group has

applied IFRS 2 retrospectively and has taken advantage of the transitional provisions of IFRS 2 in respect of equity settled awards. As a result,

the group has applied IFRS 2 only to equity settled awards granted after 7 November 2002 that had not vested on 1 January 2005.

The effect of the revised policy has decreased consolidated current year profits by $2m, R15m (net of tax $2m, R15m) (2004: nil) due to an

increase in the employee benefits expense with a corresponding increase in other comprehensive income of $2m, R15m (2004: nil).

The revised policy due to the adoption of IFRS 2 had no effect on basic and diluted earnings per share.

IFRS 3 “Business combinations”, IAS 36 (revised) “Impairment of assets” and IAS 38 (revised) “Intangible assets”

IFRS 3 has been applied to business combinations for which the agreement date is on or after 31 March 2004. IFRS 3 was not applied to the

AngloGold Ashanti business combination.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

134

1. Accounting policies (continued)

1.2 Changes in accounting policies (continued)

The adoption of IFRS 3, IAS 36 (revised) and IAS 38 (revised) has resulted in the group ceasing annual goodwill amortisation and commencing

testing for impairment at the cash-generating unit level annually (unless an event occurs during the year which requires the goodwill to be tested

more frequently) from 1 January 2005. The transitional provisions of IFRS 3 have required the group to eliminate at 1 January 2005 the carrying

amount of the accumulated amortisation by $194m, R1,096m with a corresponding entry to goodwill. Amortisation in 2004 amounted to $31m,

R200m.

Moreover, the useful lives of intangible assets are now assessed at the individual asset level as having either a finite or indefinite life. Until the end

of last year, intangible assets were considered to have a finite useful life with a rebuttable presumption that the life would be the lesser of the life

of mine or twenty years from the date when the asset was available for use.

IFRS 5 “Non-current assets held for sale and discontinued operations”

The group has applied IFRS 5 prospectively in accordance with the transitional provisions, which has resulted in a change in accounting policy

on the recognition of a discontinued operation and non-current assets held for sale.

IFRS 5 requires a component of an entity to be classified as a discontinued operation when the criteria to be classified as held for sale have been

met, or it has been disposed of. An item is classified as held for sale if its carrying amount will be recovered principally through a sale transaction

rather than through continuing use. Such a component represents a separate major line of business or geographical area of operations, is part

of a single co-ordinated plan to dispose of a major line of business or geographical area of operations, or is a subsidiary acquired exclusively with

a view to resell.

IAS 19 Amendment – “Actuarial gains and losses, group plans and disclosures”

As of 1 January 2005, the group adopted IAS 19 (revised). As a result, additional disclosures are made providing information about trends in the

assets and liabilities in the defined benefit plans and the assumptions underlying the components of the defined benefit cost. This change in

accounting policy has resulted in additional disclosures being included for the years ended 31 December 2005 and 2004.

Further, as of 1 January 2005, the group has early adopted the amendment to IAS 19 permitting the accounting for actuarial gains and losses

through equity reserves. The result of this change in accounting policy is that the previously unrecognised actuarial losses of $27m, R173m (2004:

$3m, R15m) are recognised in the Statement of Recognised Income and Expense.

IAS 21 (revised) “The effects of changes in foreign exchange rates” and IAS 21 Amendment – “Net investment in foreign operation”

As of 1 January 2005, the group adopted IAS 21(revised). As a result, any goodwill arising on the acquisition of a foreign operation and any fair

value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are now treated as assets and liabilities of the foreign

operation and translated at closing rate. In accordance with the transitional provisions of IAS 21 this change is applied prospectively. This change

in accounting policy had no impact as at 31 December 2005.

Further as of 1 January 2005, the group has early adopted the December 2005 amendment to IAS 21, in addition to the amended requirements

of IAS 21 (revised), which require exchange differences arising on a monetary item denominated in any currency and that forms part of a reporting

entity’s net investment in a foreign operation to be recognised initially in the entity’s income statement and as a separate component of equity in

the consolidated financial statements. The effect of this change in accounting policy on the company financial statements on 1 January 2004 was

that R733m was transferred to retained earnings, and for 2004, R78m was recognised in the income statement instead of equity. On the adoption

of IAS 21, the group converted retained earnings at the historical average exchange rate which resulted in $220m being recognised directly in

equity.

Foreign currency convertible bonds

This change in accounting policy was made in response to additional guidance becoming available from the IASB on the interpretation of

International Financial Reporting Standards. This change is applied retrospectively and comparative figures have been restated. Previously, foreign

currency convertible bonds were accounted for as compound financial instruments, part equity and part liability. The equity component was not

remeasured for changes in fair value.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

135

1. Accounting policies (continued)

1.2 Changes in accounting policies (continued)

Foreign currency convertible bonds (continued)

Foreign currency convertible bonds will now be accounted for entirely as a liability, with the option component disclosed as a derivative liability,

carried at fair value. Changes in such fair value are recorded in the income statement.

The impact on December 2004 is an increase in profit attributable to shareholders of $27m, R160m. The option component previously disclosed

as equity ($82m, R463m) is removed from shareholders equity and replaced by a derivative liability of $56m, R317m. The effect of the revised

policy on earnings per share at 2004 was an increase in earnings per share of US10.74c, SA63.66c.

1.3 Significant accounting judgements and estimates

Use of estimates: The preparation of the financial statements requires the group’s management to make estimates and assumptions that affect

the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the

reported amounts of revenues and expenses during the reporting period. The determination of estimates requires the exercise of judgement

based on various assumptions and other factors such as historical experience, current and expected economic conditions, and in some cases

actuarial techniques. Actual results could differ from those estimates.

The more significant areas requiring the use of management estimates and assumptions relate to mineral reserves that are the basis of future

cash flow estimates and unit-of-production depreciation, depletion and amortisation calculations; environmental, reclamation and closure

obligations; estimates of recoverable gold and other materials in heap leach pads; asset impairments (including impairments of goodwill), write-

downs of inventory to net realisable value; post-employment, post-retirement and other employee benefit liabilities, the fair value and accounting

treatment of financial instruments and deferred taxation.

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future

events that are believed to be reasonable under the circumstances.

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within

the next financial year are discussed below.

Carrying value of goodwill and tangible assets

All mining assets are amortised using the units-of-production (UOP) method where the mine operating plan calls for production from well-defined

mineral reserves.

For mobile and other equipment, the straight-line method is applied over the estimated useful life of the asset which does not exceed the

estimated mine life based on proved and probable mineral reserves as the useful lives of these assets are considered to be limited to the life of

the relevant mine.

The calculation of the UOP rate of amortisation could be impacted to the extent that actual production in the future is different from current

forecast production based on proved and probable mineral reserves. This would generally result to the extent that there are significant changes

in any of the factors or assumptions used in estimating mineral reserves. These factors could include:

•

changes in proved and probable mineral reserves;

•

the grade of mineral reserves may vary significantly from time to time;

•

differences between actual commodity prices and commodity price assumptions;

•

unforeseen operational issues at mine sites;

•

changes in capital, operating, mining, processing and reclamation costs, discount rates and foreign exchange rates; and

•

changes in mineral reserves could similarly impact the useful lives of assets depreciated on a straight-line basis, where those lives are limited

to the life of the mine.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December 2005

136

1. Accounting policies (continued)

1.3 Significant accounting judgements and estimates (continued)

Carrying value of goodwill and tangible assets (continued)

The recoverable amounts of cash-generating units and individual assets have been determined based on the higher of value-in-use calculations

and fair values. These calculations require the use of estimates and assumptions. It is reasonably possible that the gold price assumption may

change which may then impact our estimated life of mine determinant and may then require a material adjustment to the carrying value of goodwill

and tangible assets.

The group reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not

be recoverable. In addition, goodwill is tested on an annual basis for impairment. Assets are grouped at the lowest level for which identifiable cash

flows are largely independent of cash flows of other assets and liabilities. If there are indications that impairment may have occurred, estimates

are prepared of expected future cash flows for each group of assets. Expected future cash flows used to determine the value in use of goodwill

and tangible assets are inherently uncertain and could materially change over time. They are significantly affected by a number of factors including

reserves and production estimates, together with economic factors such as spot and future gold prices, discount rates, foreign currency

exchange rates, estimates of costs to produce reserves and future capital expenditure.

The carrying amount of goodwill at 31 December 2005 was $373m, R2,366m (2004: $387m, R2,188m). The carrying amount of tangible assets

at 31 December 2005 was $5,905m, R37,464m (2004: $5,888m, R33,239m).

Income taxes

The group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide provision for

income taxes due to the complexity of legislation. There are many transactions and calculations for which the ultimate tax determination is

uncertain during the ordinary course of business. The group recognises liabilities for anticipated tax audit issues based on estimates of whether

additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such

differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

The group recognises the net future tax benefit related to deferred income tax assets to the extent that it is probable that the deductible temporary

differences will reverse in the foreseeable future. Assessing the recoverability of deferred income tax assets requires the group to make significant

estimates related to expectations of future taxable income. Estimates of future taxable income are based on forecast cash flows from operations

and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from

estimates, the ability of the group to realise the net deferred tax assets recorded at the balance sheet date could be impacted.

Additionally, future changes in tax laws in the jurisdictions in which the group operates could limit the ability of the group to obtain tax deductions

in future periods.

Carrying values at 31 December 2005:

– deferred tax asset: $44m, R279m (2004; nil)

– deferred tax liability: $1,159m, R7,353m (2004: $1,356m, R7,653m)

– taxation liability: $112m, R710m (2004: $65m, R368m)

Provision for environmental rehabilitation

The group’s mining and exploration activities are subject to various laws and regulations governing the protection of the environment. The group

recognises management’s best estimate for asset retirement obligations in the period in which they are incurred. Actual costs incurred in future

periods could differ materially from the estimates. Additionally, future changes to environmental laws and regulations, life of mine estimates and

discount rates could affect the carrying amount of this provision. Such changes in Mineral Reserves could similarly impact the useful lives of assets

depreciated on a straight-line-basis, where those lives are limited to the life of mine.

The carrying amounts of the rehabilitation obligations at 31 December 2005 was $337m, R2,143m (2004: $217m, R1,224m).

Stockpiles, gold in process and product inventories

Costs that are incurred in or benefit the productive process are accumulated as stockpiles, gold in process, ore on leach pads and product

inventories. Net realisable value tests are performed at least annually and represent the estimated future sales price of the product based on

prevailing and long-term metals prices, less estimated costs to complete production and bring the product to sale.

Stockpiles are measured by estimating the number of tonnes added and removed from the stockpile, the number of contained gold ounces

based on assay data, and the estimated recovery percentage based on the expected processing method. Stockpile tonnages are verified

by periodic surveys.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December 2005

137

1. Accounting policies (continued)

1.3 Significant accounting judgements and estimates (continued)

Stockpiles, gold in process and product inventories (continued)

Although the quantities of recoverable metal are reconciled by comparing the grades of ore to the quantities of gold actually recovered

(metallurgical balancing), the nature of the process inherently limits the ability to precisely monitor recoverability levels. As a result, the metallurgical

balancing process is constantly monitored and the engineering estimates are refined based on actual results over time.

The carrying amount of inventories at 31 December 2005 was $570m, R3,618m (2004: $441m, R2,487m).

Recoverable tax, rebates, levies and duties

In a number of countries, particularly in Africa, AngloGold Ashanti is due refunds of input tax which remain outstanding for periods longer than

those provided for in the respective statutes.

In addition, AngloGold Ashanti has unresolved tax disputes in a number of countries, particularly in Tanzania and Mali. If the outstanding input

taxes are not received and the tax disputes are not resolved in a manner favourable to AngloGold Ashanti, it could have an adverse effect upon

the carrying value of these assets.

The carrying value at 31 December 2005 was $99m, R627m (2004: $84m, R468m).

Contingencies

By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of such contingencies

inherently involves the exercise of significant judgement and estimates of the outcome of future events.

1.4 Summary of significant accounting policies

Joint ventures

A joint venture is an entity in which the group holds a long-term interest and which is jointly controlled by the group and one or more other

venturers under a contractual arrangement. The group’s interests in jointly controlled entities are accounted for by proportionate consolidation.

The group does not recognise its share of profits or losses that result from the group’s purchase of assets from the joint venture until it resells the

assets to an independent party. A loss on the transaction is recognised immediately if it provides evidence of a reduction in the net realisable

value of current assets, or an impairment loss.

Joint ventures are accounted for at cost and are adjusted for impairments where appropriate in the company financial statements.

Associates

The equity method of accounting is used for an investment over which the group exercises significant influence and normally owns between 20%

and 50% of the voting equity. Associates are equity accounted from the effective dates of acquisition to the effective dates of disposal.

As the group only has significant influence, it is unable to obtain reliable information at year end on a timely basis. The results of associates are

equity accounted from their most recent audited annual financial statements or unaudited interim financial statements, all within three months of

the year end of the group. Adjustments are made to the associates’ financial results for material transactions and events in the intervening period.

Any losses of associates are brought to account in the consolidated financial statements until the investment in such associates is written down

to zero. Thereafter, losses are accounted for only insofar as the group is committed to providing financial support to such associates.

The carrying values of the investments in associates represent the cost of each investment, including goodwill, any impairment losses recognised,

the share of post-acquisition retained earnings and losses, and any other movements in reserves. The carrying value of associates is reviewed

on a regular basis and if any impairment in value has occurred, it is recognised in the period in which these circumstances are identified.

Associates are accounted for at cost and are adjusted for impairments where appropriate in the company financial statements.

Foreign currency translation

Functional currency

Items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment

in which the entity operates (the ‘functional currency’).

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

138

1. Accounting policies (continued)

1.4 Summary of significant accounting policies (continued)

Transactions and balances

Foreign currency transactions are translated into the functional currency using the approximate exchange rates prevailing at the dates of the

transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at the

year-end exchange rate of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except

where hedge accounting is applied.

Translation differences on non-monetary items, such as equities held at fair value through profit or loss, are reported as part of their fair value gain

or loss. Translation differences on non-monetary items, such as equities classified as available-for-sale financial assets, are included in other

comprehensive income in equity.

Group companies

The results and financial position of all group entities (none of which has the currency of a hyperinflationary economy) that have a functional

currency different from the presentation currency are translated into the presentation currency as follows:

•

equity items other than retained earnings are translated at the closing rate on each balance sheet date;

•

retained earnings are converted at historical average exchange rates;

•

assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

•

income and expenses for each income statement presented are translated at monthly average exchange rates (unless this average is not

a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses

are translated at the dates of the transactions); and

•

all resulting exchange differences are recognised as a separate component of equity (foreign currency translation).

Exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments

designated as hedges of such investments, are taken to shareholders’ equity on consolidation. For the company, the exchange differences on

such monetary items are reported in the company income statement.

When a foreign operation is sold, such exchange differences are recognised in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation

and translated at the closing rate.

Segment reporting

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are

different from those of other business segments. Management have determined that the group operates primarily in one segment, gold. A

geographical segment provides products or services within a particular economic environment that is subject to risks and returns that are different

from those of segments operating in other economic environments.

Tangible assets

Tangible assets are recorded at cost less accumulated amortisation and impairments. Cost includes pre-production expenditure incurred during

the development of a mine and the present value of future decommissioning costs. Cost also includes finance charges capitalised during the

construction period where such expenditure is financed by borrowings.

If there is an indication that the recoverable amount of any of the tangible assets is less than the carrying value, the recoverable amount is

estimated and an allowance is made for the impairment in value.

Subsequent costs are included in the asset’s carrying amount only when it is probable that future economic benefits associated with the item will

flow to the group, and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement

during the financial period in which they are incurred.

Amortisation of assets is calculated to allocate the cost of each asset to its residual value over its estimated useful life for those assets not

amortised on the units-of-production method as follows:

•

buildings up to life of mine;

•

plant and machinery up to life of mine;

•

equipment and motor vehicles up to five years; and

•

computer equipment up to three years.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

139

1. Accounting policies (continued)

1.4 Summary of significant accounting policies (continued)

Major renovations are depreciated over the remaining useful life of the related asset or to the date of the next major renovation, whichever

is sooner.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement.

Mine development costs

Capitalised mine development costs include expenditure incurred to develop new orebodies, to define further mineralisation in existing orebodies,

to expand the capacity of a mine and to maintain production. Where funds have been borrowed specifically to finance a project, the amount of

interest capitalised represents the actual borrowing costs incurred. Mine development costs include acquired proved and probable Mineral

Resources at cost at acquisition date.

Depreciation, depletion and amortisation of mine development costs are computed by the units-of-production method based on estimated

proved and probable mineral reserves. Proved and probable mineral reserves reflect estimated quantities of economically recoverable reserves

which can be recovered in the future from known mineral deposits. These reserves are amortised from the date on which commercial production

begins.

Stripping costs incurred in open-pit operations during the production phase to remove additional waste are charged to operating costs on the

basis of the average life of mine stripping ratio and the average life of mine costs per tonne. The average stripping ratio is calculated as the number

of tonnes of waste material expected to be removed during the life of mine per tonne of ore mined. The average life of mine cost per tonne is

calculated as the total expected costs to be incurred to mine the orebody, divided by the number of tonnes expected to be mined. The average

life of mine stripping ratio and the average life of mine cost per tonne are recalculated annually in the light of additional knowledge and changes

in estimates.

The cost of the “excess stripping” is capitalised as mine development costs when the actual mining costs exceed the sum of the adjusted tonnes

mined, being the actual ore tonnes plus the product of the actual ore tonnes multiplied by the average life of mine stripping ratio multiplied by the

life of mine cost per tonne. When the actual mining costs are below the sum of the adjusted tonnes mined, being the actual ore tonnes plus the

product of the actual ore tonne multiplied by the average life of mine stripping ratio, multiplied by the life of mine cost per tonnes, previously

capitalised costs are expensed to increase the cost up to the average.

The cost of stripping in any period will be reflective of the average stripping rates for the orebody as a whole. Changes in the life of mine stripping

ratio are accounted for prospectively as a change in estimate.

Mine infrastructure

Mine plant facilities including decommissioning assets are amortised using the lesser of their useful life or units-of-production method based on

estimated proved and probable mineral reserves. Other fixed assets comprising vehicles and computer equipment, are depreciated by the

straight-line method over their estimated useful lives.

Land

Land is not depreciated and is measured at historical cost less impairments.

Mineral rights, dumps and exploration properties

Mineral rights are amortised using the units-of-production method based on estimated proved and probable mineral reserves. Dumps are

amortised over the period of treatment.

Exploration properties include acquired properties that are believed to contain value beyond proved and probable mineral reserves and are

recognised at cost. Exploration properties when proved and probable are transferred to mine development costs at carrying value, and are

amortised from the date on which commercial production begins.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

140

Accounting policies (continued)

1.4 Summary of significant accounting policies (continued)

Intangible assets

Acquisition and goodwill arising thereon

Where an investment in a subsidiary, joint venture or an associate is made, any excess of the purchase price over the fair value of the attributable

mineral reserves, exploration properties and net assets is recognised as goodwill. Goodwill in respect of subsidiaries and proportionately

consolidated joint ventures is disclosed as goodwill. Goodwill relating to associates is included within the carrying value of the investment in

associates and tested for impairment when indicators exist.

Goodwill relating to subsidiaries and joint ventures is tested annually for impairment and carried at cost less accumulated impairment losses.

Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash-

generating units for the purpose of impairment testing.

Royalty rate concession

Royalty rate concession with the government of Ghana was capitalised at fair value at agreement date. Fair value represents a present value of

future royalty rate concessions over 15 years. The royalty rate concession has been assessed to have a finite life and is amortised under a straight-

line method over a period of 15 years, the period over which the concession runs. The related amortisation expense is charged through the

income statement. This intangible asset is also tested for impairment when there is an indicator of impairment.

Impairment of assets

Intangible assets that have an indefinite useful life and separately recognised goodwill are not subject to amortisation and are tested annually for

impairment and whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. Assets that are subject

to amortisation are tested for impairment whenever events or changes in circumstance indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount

is the higher of an asset’s fair value, less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the

lowest levels for which there are separately identifiable cash flows (cash-generating units).

Impairment calculation assumptions include life of mine plans based on prospective reserves and resources, management’s estimate of the future

gold price, based on current market price trends, foreign exchange rates, and a pre-tax discount rate adjusted for country and project risk. It is

therefore reasonably possible that changes could occur which may affect the recoverability of tangible and intangible assets.

Borrowing costs

Interest on borrowings relating to the financing of major capital projects under construction is capitalised during the construction phase as part

of the cost of the project. Such borrowing costs are capitalised over the period during which the asset is being acquired or constructed and

borrowings have been incurred. Capitalisation ceases when construction is interrupted for an extended period or when the asset is substantially

complete. Other borrowing costs are expensed as incurred.

Leased assets

Assets subject to finance leases are capitalised at the lower of fair value or present value of minimum lease payments with the related lease

obligation recognised at the same amount. Capitalised leased assets are depreciated over the shorter of their estimated useful lives and the lease

term. Finance lease payments are allocated using the rate implicit in the lease, which is included in finance costs, and the capital repayment,

which reduces the liability to the lessor.

Operating lease rentals are charged against operating profits in a systematic manner related to the period the assets concerned will be used.

Exploration and research expenditure

When it has been determined that a mineral property can be economically developed, all directly attributable pre-production expenditure incurred

to develop such property is capitalised as a tangible asset. In all other circumstances, exploration and research expenditure is expensed in the

year in which it is incurred. These expenses include: geological and geographical costs, labour, mineral resources and exploratory drilling.

Capitalisation of pre-production expenditure ceases when the mining property is capable of commercial production.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

141

1. Accounting policies (continued)

1.4 Summary of significant accounting policies (continued)

Inventories

Inventories are valued at the lower of cost and net realisable value after appropriate allowances for redundant and slow moving items. Cost is

determined on the following bases:

•

gold in process is valued at the average total production cost at the relevant stage of production;

•

gold on hand is valued on an average total production cost method;

•

ore stockpiles are valued at the average moving cost of mining and stockpiling the ore. Stockpiles are allocated as a non-current asset

where the stockpile exceeds current processing capacity;

•

by-products, which include uranium oxide and sulphuric acid are valued on an average total production cost method. By-products are

allocated as a non-current asset where the by-products on hand exceed current processing capacity;

•

consumable stores are valued at average cost; and

•

heap leach pad materials are measured on an average total production cost basis. The cost of materials on the leach pad from which gold

is expected to be recovered in a period greater than 12 months is classified as a non-current asset.

A portion of the related depreciation, depletion and amortisation charge is included in the cost of inventory.

Provisions

Provisions are recognised when the group has a present obligation, whether legal or constructive, as a result of a past event for which it is

probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made

of the amount of the obligation.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the

balance sheet date. The discount rate used to determine the present value reflects current market assessments of the time value of money and

the risks specific to the liability.

AngloGold Ashanti does not recognise a contingent liability on its balance sheet except in a business combination. A contingent liability is

disclosed when the possibility of an outflow of resources embodying economic benefits is not remote.

Employee benefits

Pension obligations

Group companies operate various pension schemes. The schemes are funded through payments to insurance companies or trustee-

administered funds, determined by periodic actuarial calculations. The group has both defined benefit and defined contribution plans. A defined

benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one

or more factors such as age, years of service and compensation.

A defined contribution plan is a pension plan under which the group pays fixed contributions into a separate entity. The group has no legal or

constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to

employee service in the current and prior periods. The contributions are recognised as employee benefit expense when they are due. Prepaid

contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

The asset/liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation

at the balance sheet date less the fair value of plan assets, together with adjustments for past service costs. The defined benefit obligation is

calculated annually by independent actuaries using the projected unit credit method.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recorded in the statement of recognised

income and expenditure immediately.

Other post-employment benefit obligations

Some group companies provide post-retirement healthcare benefits to their retirees. The entitlement to these benefits is usually conditional on

the employee remaining in service up to retirement age and the completion of a minimum service period. The expected costs of these benefits

are accrued over the period of employment using an accounting methodology on the same basis as that used for defined benefit pension plans.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recorded in the statement of recognised

income and expenditure immediately. These obligations are valued annually by independent qualified actuaries.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

142

1. Accounting policies (continued)

1.4 Summary of significant accounting policies (continued)

Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary

redundancy in exchange for these benefits. The group recognises termination benefits when it is demonstrably committed to either: terminating

the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a

result of an offer made to encourage voluntary redundancy based on the number of employees expected to accept the offer. Benefits falling due

more than 12 months after balance sheet date are discounted to present value.

Profit-sharing and bonus plans

The group recognises a liability and an expense for bonuses and profit-sharing, based on a formula that takes into consideration the profit

attributable to the group’s shareholders after certain adjustments. The group recognises a provision where contractually obliged or where there

is a past practice that has created a constructive obligation.

Share-based payments

The group’s management awards certain employees bonuses in the form of equity settled share-based payments on a discretionary basis.

The fair value of the equity instruments granted is calculated at measurement date, for transactions with employees being grant date. For

transactions with employees fair value is based on market prices of the equity instruments granted, if available, taking into account the terms and

conditions upon which those equity instruments were granted. If market prices of the equity instruments granted are not available, the fair value

of the equity instruments granted is estimated using an appropriate valuation model. For transactions with non-employees fair value is determined

by reference to the goods or services received. Vesting conditions, other than market conditions, are not taken into account when estimating the

fair value of shares or share options at the measurement date.

Over the vesting period fair value is recognised as an employee benefit expense with a corresponding increase in other comprehensive income

based on the group’s estimate of the number of instruments that will eventually vest. The income statement charge or credit for a period

represents the movement in cumulative expense recognised as at the beginning and end of that period. Vesting assumptions for non-market

conditions are reviewed at each reporting date to ensure they reflect current expectations.

When the options are exercised or share awards vest the proceeds received, net of any directly attributable transaction costs, are credited to

share capital (nominal value) and share premium.

Where the terms of an equity settled award are modified, as a minimum, an expense is recognised as if the terms had not been modified. In

addition, an expense is recognised for any modification, which increases the total fair value of the share-based payment arrangement, or is

otherwise beneficial to the employee as measured at the date of the modification.

In the company financial statements share-based payment arrangements with employees of other group entities are recognised by charging the

entity their share of the expense and a corresponding increase in other comprehensive income.

Environmental expenditure

Long-term environmental obligations comprising decommissioning and restoration are based on the group's environmental management plans,

in compliance with the current environmental and regulatory requirements.

Annual contributions for the South African operations are made to Environmental Rehabilitation Trusts, created in accordance with local statutory

requirements where applicable, to fund the estimated cost of rehabilitation during and at the end of the life of a mine.

AngloGold Ashanti is the sole contributor to the funds and exercises full control through the respective boards of trustees, hence the funds are

consolidated.

The environmental rehabilitation obligations in respect of the non-South African operations are not funded through an established trust fund. Bank

guarantees and reclamation bonds are provided for some of these liabilities.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

143

1. Accounting policies (continued)

1.4 Summary of significant accounting policies (continued)

Decommissioning costs

The provision for decommissioning represents the cost that will arise from rectifying damage caused before production commenced. Accordingly

an asset is recognised and included within mine infrastructure.

Decommissioning costs are provided for at the present value of the expenditures expected to settle the obligation, using estimated cash flows

based on current prices. The unwinding of the decommissioning obligation is included in the income statement. The estimated future costs of

decommissioning obligations are regularly reviewed and adjusted as appropriate for new circumstances or changes in law or technology.

Changes in estimates are capitalised or reversed against the relevant asset. The estimates are discounted at a pre-tax rate that reflects current

market assessments of the time value of money.

Gains from the expected disposal of assets are not taken into account when determining the provision.

Restoration costs

The provision for restoration represents the cost of restoring site damage after the commencement of production. Increases in the provision are

charged to the income statement as a cost of production.

Gross restoration costs are estimated at the present value of the expenditures expected to settle the obligation, using estimated cash flows based

on current prices. The estimates are discounted at a pre-tax rate that reflects current market assessments of the time value of money.

Revenue recognition

Revenue is recognised at the fair value of the consideration received or receivable to the extent that it is probable that the economic benefits will

flow to the group and the revenue can be reliably measured. The following criteria must also be present:

•

the sale of mining products is recognised when the significant risks and rewards of ownership of the products are transferred to the buyer;

•

dividends are recognised when the right to receive payment is established;

•

interest is recognised on a time proportion basis, taking account of the principal outstanding and the effective rate over the period to

maturity, when it is determined that such income will accrue to the group; and

•

where a by-product is not regarded as significant, revenue is credited against cost of sales, when the significant risks and rewards of

ownership of the products are transferred to the buyer.

Taxation

Deferred taxation is provided on all qualifying temporary differences at the balance sheet date between the tax bases of assets and liabilities and

their carrying amounts for financial reporting purposes.

Deferred tax assets are only recognised to the extent that it is probable that the deductible temporary differences will reverse in the foreseeable

future and future taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that

sufficient future taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

A deferred tax liability is recognised for all taxable temporary differences if it is probable that the temporary difference will reverse in the foreseeable

future.

Deferred tax assets and liabilities are measured at future anticipated tax rates, which have been enacted or substantively enacted at the balance

sheet date.

Current and deferred tax is recognised as income or expense and included in the profit or loss for the period, except to the extent that the tax

arises from a transaction or event which is recognised, in the same or a different period directly in equity; or a business combination that is an

acquisition.

Current taxation is measured on taxable income at the applicable statutory rate.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

144

1. Accounting policies (continued)

1.4 Summary of significant accounting policies (continued)

Special items

Items of income and expense that are material and require separate disclosure, in accordance with IAS 1.86, are classified as “special items” on

the face of the income statement. Special items that relate to the underlying performance of the business are classified as “operating special

items” and include impairment charges and reversals. Special items that do not relate to underlying business performance are classified as “non-

operating special items” and are presented below “Operating (loss) profit” on the income statement.

Dividend distribution

Dividend distribution to the group’s shareholders is recognised as a liability in the group’s financial statements in the period in which the dividends

are declared by the board of directors of AngloGold Ashanti.

Financial instruments

Financial instruments recognised on the balance sheet include other investments, convertible bonds, trade and other receivables, cash and cash

equivalents, borrowings, derivatives and trade and other payables.

Financial instruments are initially measured at fair value when the group becomes a party to their contractual arrangements. Transaction costs

are included in the initial measurement of financial instruments, except financial instruments classified as at fair value through profit and loss.

The subsequent measurement of financial instruments is dealt with below.

A financial asset is derecognised when the right to receive cash flows from the asset has expired or the group has transferred its rights to receive

cash and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all

the risks and rewards of the asset, but has transferred control of the assets.

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

On derecognition of a financial asset, the difference between the proceeds received or receivable and the carrying amount of the asset is included

in income.

On derecognition of a financial liability, the difference between the carrying amount of the liability extinguished or transferred to another party and

the amount paid for is included in income.

Regular way purchases and sales of all financial assets and liabilities are accounted for at trade date.

Derivatives

The group enters into derivatives to ensure a degree of price certainty and to guarantee a minimum revenue on a portion of the future planned

gold production of its mines. In addition, the group enters into derivatives to manage interest rate risk.

IAS 39 requires that derivatives be treated as follows:

•

commodity based (normal purchase or normal sale) contracts that meet the requirements of IAS39 are recognised in earnings when they

are settled by physical delivery;

•

where the conditions in IAS39 for hedge accounting are met, the derivative is recognised on the balance sheet as either a derivative asset

or derivative liability and recorded at fair value. For cash flow hedges, the effective portion of fair value gains or losses are recognised in

equity (other comprehensive income) until the underlying transaction occurs, then the gains or losses are recognised in earnings or included

in the initial measurement of covered assets or liabilities. The ineffective portion of fair value gains and losses is reported in earnings in the

period to which they relate. For fair value hedges, the gain or loss from changes in fair value of the hedged item is reported in earnings,

together with the offsetting gains and losses from changes in fair value of the hedging instrument; and

•

all other derivatives are subsequently measured at their estimated fair value, with the changes in estimated fair value at each reporting date

being reported in earnings in the period to which it relates. Fair value gains and losses on these derivatives are included in gross profit in

the income statement.

The estimated fair values of derivatives are determined at discrete points in time based on the relevant market information. These estimates are

calculated with reference to the market rates using industry standard valuation techniques.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

145

1. Accounting policies (continued)

1.4 Summary of significant accounting policies (continued)

Unearned premiums

Premiums received are recorded as trade and other payables until the option matures at which time the premium is recorded in revenue. This

only applies to normal sale exempt designated deliverable call options.

Investments

Listed investments, other than investments in subsidiaries, joint ventures, and associates, are classified as available-for-sale financial assets and

are subsequently measured at fair value, and are calculated by reference to the quoted selling price at the close of business on the balance sheet

date. Changes in fair value are recognised in equity (other comprehensive income) in the period in which they arise. These amounts are removed

from equity and reported in income when the asset is derecognised or when there is evidence that the asset is impaired.

Unlisted investments are classified as held-to-maturity and are subsequently measured at amortised cost using the effective interest rate method.

If there is evidence that held-to-maturity financial assets are impaired, the carrying amount of the assets is reduced and the loss recognised in

the income statement.

Investments in subsidiaries, joint ventures and associates are carried at cost less any accumulated impairments in the company’s separate

financial statements.

Other non-current assets

•

Loans and receivables are subsequently measured at amortised cost using the effective interest rate method. If there is evidence that loans

and receivables are impaired, the carrying amount of the assets is reduced and the loss recognised in the income statement.

•

Post retirement assets are measured according to the employee benefits policy.

Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less

accumulated impairment. Impairment of trade and other receivables is established when there is objective evidence as a result of a loss event

that the group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the impairment is the

difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest

rate. The impairment is recognised in the income statement.

Cash and cash equivalents

Cash and cash equivalents are defined as cash on hand, demand deposits and short-term, highly liquid investments readily convertible to known

amounts of cash and subject to insignificant risk of changes in value and are subsequently measured at cost as they have a short-term maturity.

Cash which is subject to legal or contractual restrictions on use is classified separately.

Financial liabilities

Financial liabilities, other than derivatives, are subsequently measured at amortised cost, using the effective interest rate method.

Foreign currency convertible bonds

Foreign currency convertible bonds issued are accounted for entirely as liabilities. The option component is treated as a derivative liability and

carried at fair value with changes in fair value recorded in the income statement. The bond component is carried at amortised cost using the

effective interest rate method.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

146

Segmental information

Based on risks and returns the directors consider that the primary reporting format is by business segment. The directors consider that

there is only one business segment being mining, extraction and production of gold. Therefore the disclosures for the primary segment

have already been given in these financial statements.

The secondary reporting format is by geographical analysis by origin and destination.

Group analysis by origin is as follows:

Net operating

Total

Capital

assets

expenditure

2005

2004

2005

2004

2005

2004

US Dollars (m)

South Africa

1,878

1,867

2,451

2,664

347

335

Argentina

199

207

258

316

Australia

(1)

382

379

747

720

Brazil

269

211

386

348

Ghana

1,675

1,698

1,800

1,774

Guinea

228

197

273

242

Mali

220

234

316

322

Namibia

Tanzania

(1)

900

836

1,249

1,107

USA

374

380

431

409

Zimbabwe

–

Other

107

337

262

6,255

6,146

8,294

8,202

722

585

SA Rands (m)

South Africa

11,916

10,541

15,554

15,039

2,208

2,159

Argentina

1,264

1,166

1,635

1,784

Australia

(1)

2,426

2,139

4,738

4,062

244

182

Brazil

1,708

1,193

2,449

1,962

544

261

Ghana

10,629

9,585

11,419

10,016

574

269

Guinea

1,446

1,115

1,735

1,366

229

366

Mali

1,394

1,319

2,007

1,820

Namibia

217

172

289

216

134

Tanzania

(1)

5,709

4,719

7,924

6,233

496

USA

2,375

2,144

2,734

2,311

103

Zimbabwe

–

Other

607

605

2,138

1,487

39,691

34,698

52,622

46,296

4,600

3,764

(1)

Includes allocated goodwill of $220m, R1,400m for Australia and $109m, R692m for Tanzania.

Segmental information (continued)

Gold

Average

production

number of

(oz ’000)

(kg)

employees

2005

2004

2005

2004

2005

2004

South Africa

2,676

2,857

83,223

88,860

42,536

45,200

Argentina

211

6,564

6,575

950

791

Australia

455

410

14,139

12,762

441

455

Brazil

346

334

10,756

10,382

3,489

2,686

Ghana

680

485

21,170

15,041

10,304

8,855

Guinea

246

7,674

2,565

1,978

2,335

Mali

528

475

16,421

14,789

1,309

1,413

Namibia

2,510

2,070

315

251

Tanzania

613

570

19,074

17,740

2,280

2,258

USA

330

329

10,252

10,234

391

411

Zimbabwe

–

293

–

745

6,166

5,829

191,783

181,311

63,993

65,400

Gold income

US Dollars

SA Rands

(m)

2005

2004

2005

2004

Geographical analysis of gold income by origin is as follows:

South Africa

1,153

1,118

7,359

7,189

Argentina

617

620

Australia

213

172

1,349

1,099

Brazil

172

158

1,094

1,014

Ghana

286

198

1,821

1,257

Guinea

118

759

259

Mali

236

188

1,508

1,192

Namibia

230

176

Tanzania

214

201

1,352

1,285

USA

104

105

661

671

Zimbabwe

–

2,629

2,309

16,750

14,788

Geographical analysis of gold income by destination is as follows:

South Africa

847

524

5,393

3,357

North America

826

750

5,263

4,799

Australia

133

447

Asia

135

155

862

994

Europe

435

468

2,771

2,996

United Kingdom

365

321

2,328

2,058

South America

–

137

2,629

2,309

16,750

14,788

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

147

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

148

3 Revenue

Revenue consists of the following principal categories:

14,788

16,750

Gold income (note 2)

2,629

2,309

486

483

By-products and other revenue (note 4)

318

155

Interest received (note 36)

15,592

17,388

2,730

2,434

4 Cost of sales

10,058

11,311

Cash operating costs

1,779

1,571

(486)

(483)

By-products and other revenue (note 3)

(76)

9,572

10,828

1,703

1,495

342

412

Other cash costs

9,914

11,240

Total cash costs

⁽¹⁾

1,768

1,549

168

Retrenchment costs (note 11)

136

368

Rehabilitation and other non-cash costs

10,102

11,776

Production costs

1,851

1,578

2,423

3,203

Amortisation of tangible assets (notes 10, 17 and 36)

503

380

Amortisation of intangible assets (note 18)

12,533

14,992

Total production costs

2,356

1,959

(228)

(279)

Inventory change

(45)

(35)

12,305

14,713

2,311

1,924

(1)

Total cash costs include net refining fees.

5 Exploration costs

519

503

Expenditure incurred during the year

(236)

(215)

Expenditure transferred to tangible assets

(34)

(37)

283

288

6 Other net operating expenses

Pension and medical defined benefit provisions

Claims filed by former employees in respect of loss of employment,
work-related accident injuries and diseases, governmental fiscal claims

and costs of old tailings operations

–

Write-off of loan

–

Other

–

127

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

149

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

7 Operating special items

300

Impairment of tangible assets (notes 15 and 17)

–

125

Impairment of intangible assets (notes 15 and 18)

–

Contract termination fee at Geita Gold Mining Limited

–

Abandonment of assets at Malian operations

(1)

–

Underprovision of indirect taxes

–

(10)

Profit on disposal of Mitchell Plateau and Cape Bougainville (note 15)

(1)

–

(14)

Profit on disposal of Bear Creek (note 15)

(2)

–

(33)

(16)

Profit on disposal of land, mineral rights and exploration properties (note 15)

(2)

(5)

(14)

–

Profit on disposal of Union Reefs Gold Mine

–

(2)

(20)

–

Profit on disposal of Western Tanami assets

–

(3)

(21)

–

Profit on disposal of Tanami Gold Mine

–

(3)

–

Other

–

(80)

499

(note 36)

(12)

(1)

In prior years, various tax assessments for normal company tax and for various
indirect taxes have been issued to the joint venture operations in Mali by the Malian
authorities. The group is of the opinion that the tax filings and indirect tax
submissions by the company have been in compliance with applicable laws and
regulations. Malian law requires a deposit to be placed with the authorities when
the company objects to assessments for normal company and indirect tax
assessments in order for the objection to be reviewed.

(1)

Without admitting that the filings of the joint venture operations in Mali have been
prepared in an incorrect manner in terms of the prevailing laws and regulations, the
directors have formed a commercial view and decided that the deposits totalling
$4m, R25m previously placed with the authorities should be abandoned in order
to close this issue and allow management to concentrate on the core business.
Accordingly, the abandonment has been recorded as an operating special loss
rather than as an underprovision of prior year taxation.

8 Finance costs and unwinding of decommissioning

and restoration obligations

143

Finance costs on bank loans and overdrafts

215

Finance costs on corporate bond

127

265

Finance costs on convertible bonds (note 40)

(1)

Finance costs on interest rate swap

(2)

Finance lease charges

Other finance costs

579

731

115

(67)

(102)

Less: amounts capitalised (note 17)

(16)

(11)

512

629

Unwinding of decommissioning obligation (note 32)

–

Unwinding of restoration obligation (note 32)

–

563

690

(note 36)

108

(1)

The interest rate swap was entered into against the convertible bonds and was
designated as a fair value hedge and is considered an integral part of the bonds.
Accordingly, the finance cost on the convertible bonds is disclosed after adjusting
for the finance costs and income under the swap. The swap was unwound in
September 2005.

(2)

Interest received on the interest rate swap entered into against the corporate bond
which has not been designated as a fair value hedge was $4m, R24m (2004:
$13m, R83m). The swap was unwound in April 2005.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

150

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

9 Share of associates’ (loss) profit

Revenue

(85)

(101)

Operating expenses

(16)

(13)

(5)

Gross (loss) profit

(1)

–

Interest received

–

(1)

Finance costs

–

(5)

(Loss) profit before taxation

(1)

–

(1)

Taxation

–

(6)

(Loss) profit after taxation (note 19)

(1)

–

(11)

Impairment

⁽¹⁾

(2)

–

(17)

(3)

–

(1)

During the year, the Oro Group (Proprietary) Limited investment was impaired. The
impairment tests considered the investment’s fair value and anticipated future cash
flows. An impairment of $2m, R11m (2004: nil) was recorded.

10 (Loss) profit before taxation

(Loss) profit before taxation is arrived at after taking account of:

Auditors' remuneration

– Statutory audit fees

– Under provision prior year

–

– Other assurance services

–

Amortisation of tangible assets (notes 4, 17 and 36)

2,364

3,103

Owned assets

487

371

100

Leased assets

2,423

3,203

503

380

Grants for educational and community development

317

418

Operating lease charges

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

151

11 Employee benefits

Employee benefits including executive directors' salaries and

4,552

4,790

other benefits

752

706

Health care and medical scheme costs

286

299

– current medical expenses

118

– defined benefit post-retirement medical expenses

Contributions to pension and provident plans

254

199

– defined contribution

– defined benefit pension plan expense

168

Retrenchment costs (note 4)

–

Share-based payment expense

–

5,310

5,587

Included in cost of sales and other operating expenses

877

823

Actuarial defined benefit plan expense analysis

Defined benefit post-retirement medical expense

– current service cost

107

– interest cost

(2)

(3)

– expected return on plan assets

–

– recognised past service cost

–

118

Defined benefit pension plan expense

– current service cost

105

– interest cost

(95)

(115)

– expected return on plan assets

(18)

(15)

Actual return on plan assets

219

381

– defined benefit pension and medical plans

Refer to the Remuneration report for details of directors’ emoluments.

12 Share-based payments

Share incentive schemes

In addition to schemes approved in prior years, during the financial

year the shareholders of AngloGold Ashanti approved two equity

settled share incentive schemes, namely the Bonus Share Plan and

the Long-Term Incentive Plan.

Bonus Share Plan (BSP)

The BSP is intended to provide effective incentives to eligible

employees. An eligible employee is one who devotes substantially the

whole of his working time to the business of AngloGold Ashanti, any

subsidiary of AngloGold Ashanti or a company under the control of

AngloGold Ashanti, unless the board of directors (the board) excludes

such a company. An award in terms of the BSP may be made at any

date at the discretion of the board. The board is required to determine

a BSP award value and this will be converted to a ‘share’ amount

based on the closing price of AngloGold Ashanti shares on the JSE on

the last business day prior to the date of grant.

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

152

12 Share-based payments (continued)

The AngloGold Ashanti Remuneration Committee has at their discretion,

the right to pay dividends, or dividend equivalents, to the participants of

the BSP. The fair value of each BSP is R197.50 per share, including

dividends, or R190.76 per share, excluding dividends, having no history of

any discretionary dividend payments. The higher fair value was used to

determine the income statement expense. The fair value is equal to the

award value determined by the board.

Accordingly for the award made in 2005 the following information is

available:

– number of BSPs awarded: 283,915

– award value: R197.50 per share

– grant date: 4 May 2005

– vesting condition: three-years’ service

– expire if not exercised by: 3 May 2015

– number of BSPs outstanding at the end of the period: 271,945

– income statement charge: $2m, R12m

Up to 31 December 2005, the rights to a total of 11,682 shares were

surrendered by the participants. A total of 288 shares were allotted to

terminated employees.

Long-Term Incentive Plan (LTIP)

The LTIP is an equity settled share-based payment, intended to provide

effective incentives for executives to earn shares in the company based on

the achievement of stretched company performance conditions.

Participation in the LTIP will be offered to executive directors, executive

officers and selected senior management of participating companies.

Participating companies include AngloGold Ashanti, any subsidiary of

AngloGold Ashanti or a company under the control of AngloGold Ashanti

unless the board excludes such a company. An award in terms of the LTIP

may be granted at any date during the year that the board of AngloGold

Ashanti determine and may even be more than once a year. The board is

required to determine an LTIP award value and this will be converted to a

‘share’ amount based on the closing price of AngloGold Ashanti shares on

the JSE on the last business day prior to the date of grant.

The AngloGold Ashanti remuneration committee has at their discretion, the

right to pay dividends, or dividend equivalents to the participants of the

LTIP. The fair value of each LTIP share is R197.50 per share, including

dividends, or R190.76 per share, excluding dividends, having no history of

any discretionary dividend payments. The higher fair value was used to

determine the income statement expense. The fair value is equal to the

award value determined by the board.

The main performance conditions in terms of the LTIP are:

– up to 40% of an award will be determined by the performance of total

shareholder returns (TSR) compared with that of a group of comparator

gold-producing companies;

– up to 40% of an award will be determined by real growth (above

US inflation) in earnings per share (EPS) over the performance period;

– up to 20% of an award will be dependent on the achievement of

strategic performance measures which will be set by the Remuneration

Committee; and

– three-years’ service is required.

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

153

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

12 Share-based payments (continued)

Accordingly for the award made in 2005, the following information is available:
– number of LTIPs awarded: 368,500
– award value: R197.50 per share
– grant date: 4 May 2005
– vesting condition: based on stretched company performance and

–

three-years’ service

– expire if not exercised by: 3 May 2015
– number of LTIPs outstanding at the end of the year: 363,500
– income statement charge: R3m

Up to 31 December 2005, the rights to a total of 5,000 LTIP shares were
surrendered by the participants.

Performance-related share-based remuneration scheme – 1 May 2003
The options may be exercised at the end of a three-year period commencing
1 May 2003. The share options were granted at an exercise price of
R221.90. In June 2004, 50,000 options were awarded to the president of
the AngloGold Ashanti board of directors at an exercise price of R221.00.
The performance condition applicable to these options was that the
US dollar EPS must increase by at least 6% in real terms, after inflation,
over the next three years. In order to vest, US dollar EPS must reach at
least US188c by the end of 2006 with an indicative annual increase of
US10.20c per share over the three-year period. The probability of the
options vesting is remote. The remaining weighted average contractual life
of options granted is seven years.

Weighted

Number

average

Number average

exercise

price

SA Rands 2004

SA Rands 2005

1,239,700

221.90

Options outstanding at the beginning of the year

1,225,800

221.86

50,000

221.00

Options granted during the year

nil

63,900

221.90

Options lapsed during the year

224,000

221.70

nil

Options exercised during the year

2,400

221.90

nil

Options expired during the year

nil

1,225,800

221.86

Options outstanding at the end of the year

999,400

221.90

nil

Options exercisable at the end of the year

nil

During the year 2,400 options were exercised by the estate of a
deceased employee. On death, the performance criteria were set
aside.

Performance-related share-based remuneration scheme
– 1 November 2004
The options may be exercised at the end of a three-year period
commencing 1 November 2004. The share options were granted at an
exercise price of R228. The performance condition applicable to these
options was that US dollar EPS must increase from the 2004 year by
at least 6% in real terms, i.e. after inflation, over the next three years
meaning that US dollar EPS must reach at least US135c by the end of
2007. The probability of the options vesting is remote. The remaining
weighted average contractual life of options granted is eight years.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

154

Weighted

Number

average

Number average

exercise

price

SA Rands 2004

SA Rands 2005

12 Share-based payments (continued)

1,151,000

228.00

Options outstanding at the beginning of the year

1,149,300

228.00

nil

Options granted during the year

nil

1,700

228.00

Options lapsed during the year

135,500

228.00

nil

Options exercised during the year

900

228.00

nil

Options expired during the year

nil

1,149,300

228.00

Options outstanding at the end of the year

1,012,900

228.00

nil

Options exercisable at the end of the year

nil

During the year, 900 options were exercised by the estate of a
deceased employee. On death, the performance criteria were set aside.

There are currently two share incentive schemes that fall outside the
transitional provisions of IFRS 2, as the options were granted prior to
7 November 2002, the details of which are as follows:

Performance-related share-based remuneration scheme
– 1 May 2002

The share options were granted at an exercise price of R299.50. The
performance condition applicable to these options was that US dollar
EPS must increase by 7.5% for each of the three years. Therefore the
target was an EPS of US287c for 2002, US309c for 2003 and US332c
for 2004. On 24 December 2002, AngloGold Ashanti underwent a share
split on a 2:1 basis therefore the EPS should have been US143.5c,
US154.5c, and US166c respectively. As none of the performance
criteria were met, the grantor decided to roll the scheme forward on a
“roll over reset” basis, reviewed annually. No changes were made to the
performance criteria of EPS of US143.5c US154.5c and US166c. The
probability of the options vesting is remote and therefore no changes
were made to the incremental fair value of these modified options. The
remaining weighted average contractual life of options granted is six years.

1,182,500

299.50

Options outstanding at the beginning of the year

1,050,800

299.50

nil

Options granted during the year

nil

131,700

299.50

Options lapsed during the year

166,100

299.50

nil

Options exercised during the year

nil

Options expired during the year

nil

1,050,800

299.50

Options outstanding at the end of the year

884,700

299.50

nil

Options exercisable at the end of the year

nil

Time-related share-based remuneration scheme
– granted up to 30 April 2002

Except where the directors, in their sole and absolute discretion
decide otherwise, a grantee may not exercise his options until after the
lapse of a period calculated from the date on which the option was
granted. The remaining weighted average contractual life of options
granted is 4.6 years. The period in which and the extent to which the
options vest and may be exercised are as follows:

– After two years – up to 20% of options granted
– After three years – up to 40% of options granted
– After four years – up to 60% of options granted
– After five years – up to 100% of options granted

4,180,000

119.15

Options outstanding at the beginning of the year

1,391,060

126.38

nil

Options granted during the year

nil

548,800

119.90

Options lapsed during the year

54,400

122.00

2,240,140

114.47

Options exercised during the year

471,950

125.91

nil

Options expired during the year

nil

1,391,060

126.38

Options outstanding at the end of the year

864,710

126.91

975,000

131.00

Options exercisable at the end of the year

758,150

124.12

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

155

13 Taxation

Current taxation

153

182

Non-mining taxation

–

Impairment (note 15)

–

229

347

Under provision prior year

–

Disposal of assets – recoupment (note 15)

–

398

531

Deferred taxation

212

244

Temporary differences

–

Interest rate swap

–

(226)

(128)

Unrealised non-hedge derivatives

(21)

(40)

Taxation on contract termination fee at Geita Gold Mining

–

(19)

Limited

(3)

–

(79)

Impairment (note 15)

(12)

–

(566)

(74)

Change in estimated deferred taxation

⁽¹⁾

(12)

(99)

–

(695)

Change in statutory tax rate

⁽²⁾

(107)

–

(577)

(751)

(118)

(107)

(179)

(220)

(36)

(41)

(577)

(751)

Deferred taxation on continuing operations

(118)

(107)

Deferred taxation on discontinued operations

–

(572)

(732)

(note 34)

(115)

(107)

Tax reconciliation
A reconciliation of the current tax rate compared to that charged in the
income statement is set out in the following table:

Current tax rate

Disallowable expenditure

(32)

Goodwill amortised

–

Mining tax formula adjustment

–

(29)

Foreign income tax allowances and rate differentials

(25)

(15)

Previously unrecognised tax assets

–

(5)

Change in estimated deferred tax rate

⁽¹⁾

(105)

Change in statutory tax rate

⁽²⁾

–

Under provision for prior year

(33)

Other

(9)

Effective tax rate

(43)

(1)

During 2005, the estimates were revised in South Africa to reflect the future anticipated taxation rate at the time the temporary differences reverse.

(2)

During the financial year, there were changes in the South African and Ghanaian statutory tax rates. These rate changes are summarised as follows:

South Africa
Maximum statutory mining tax rate 45% (2004: 46%)

⁽³⁾

Non-mining statutory mining tax rate 37% (2004: 38%)
Statutory company tax rate 29% (2004: 30%)

Ghana
Statutory company tax rate 25% (2004: 32.5% – however, AngloGold Ashanti had a special tax rate concession of 30%).

(3)

Mining tax on mining income in South Africa is determined according to a formula which accounts for profit and revenue from mining operations.

All mining capital expenditure is deducted to the extent that it does not result in an assessed loss, and depreciation is ignored when calculating the South African mining income. Capital expenditure not deducted from the mining income is carried forward as unredeemed capital to be deducted from future mining income.
The formula for determining the South African mining tax is:
Y = 45 – 225/X (2004: Y = 46 – 230/X)
where Y is the percentage rate of tax payable and X is the ratio of mining profit net of any redeemable capital expenditure to mining revenue expressed as a percentage.

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

156

13 Taxation (continued)

Unrecognised tax losses
The unrecognised tax losses of the US operations which are available

1,085

1,258

for offset against future profits earned in the USA.

198

192

The unrecognised tax losses of the Ghanaian operations which are

745

925

available for offset against future profits earned in Ghana

(4)

146

132

1,830

2,183

344

324

(4)

The tax losses in Ghana will expire if not utilised within one year.

Analysis of tax losses

Tax losses available to be used against future profits

745

925

– Utilisation required within one year

146

132

1,085

1,258

– Utilisation in excess of five years

198

192

1,830

2,183

344

324

Unrecognised tax losses utilised

–

Assessed losses utilised during the year

–

14 Discontinued operations

The Ergo reclamation surface operation, which forms part of the South
African operations and is included under South Africa for segmental
reporting, has reached the end of its useful life and the assets are no
longer in use. After a detailed investigation of several options and
scenarios, and based on management’s decision reached on
1 February 2005, mining operations at Ergo ceased on 31 March
2005, with only site restoration obligations remaining. The remaining
available tonnage will be treated and cleaned through the tailings
facility. The group has reclassified the income statement results from
the historical presentation to loss from discontinued operations in the
consolidated income statement for all periods presented. The
consolidated cash flow statement has been reclassified for
discontinued operations for all periods presented.

The results of Ergo are presented below:

560

111

Gold income

(628)

(418)

Cost of sales

(66)

(98)

(68)

(307)

Gross loss

(48)

(11)

–

115

Impairment loss reversed (note 17)

–

(68)

(192)

Loss before taxation

(31)

(11)

(5)

(27)

Taxation

(5)

–

(73)

(219)

Net loss after taxation

(36)

(11)

Following the decision to discontinue the Ergo operation, AngloGold
Ashanti Limited reassessed the carrying values of the remaining
infrastructure assets of Ergo, based on the current market price of the
assets. AngloGold Ashanti has restated the assets’ carrying value
to the carrying amount that would have been determined (net of
amortisation) had no impairment loss been recognised for the assets
in prior periods, which management believes is less than fair value less
costs to sell. This resulted in an impairment reversal in the current
period of $17m, R115m (2004: nil).

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

157

15 Earnings per ordinary share

Basic (loss) earnings per ordinary share

319

(394)

– Continuing operations

(56)

The calculation of basic (loss) earnings per ordinary share is based on

losses attributable to equity shareholders of $147m, R1,043m (2004:

earnings attributable to equity shareholders of $119m, R801m) and

264,635,634 (2004: 251,352,552) shares being the weighted average

number of ordinary shares in issue during the financial year.

(29)

(83) – Discontinued

operations

(14)

(4)

The calculation of basic loss per ordinary share is based on losses

attributable to equity shareholders of $36m, R219m (2004: $11m,

R73m) and 264,635,634 (2004: 251,352,552) shares being the

weighted average number of ordinary shares in issue during the

financial year.

Diluted (loss) earnings per ordinary share

318

(394)

– Continuing operations

(56)

The calculation of diluted (loss) earnings per ordinary share is based on

losses attributable to equity shareholders of $147m, R1,043m (2004:

earnings attributable to equity shareholder of $119m, R801m) and

264,635,634 (2004: 252,048,301) shares being the diluted number of

ordinary shares. In 2005, no adjustment is made since the effect is

anti-dilutive.

(29)

(83) – Discontinued

operations

(14)

(4)

The calculation of diluted earnings per ordinary share is based on

losses attributable to equity shareholders of $36m, R219m (2004:

$11m, R73m) and 264,635,634 (2004: 252,048,301) shares being the

diluted number of ordinary shares. In 2005, no adjustment was made

since the effect is anti-dilutive.

The weighted average number of shares has been adjusted by the

following to arrive at the diluted number of ordinary shares.

Weighted average number of shares

264,635,634

251,352,552

Dilutive potential of share options

(1)

–

695,749

Diluted number of ordinary shares

264,635,634

252,048,301

(1)

The calculation of diluted earnings per share for 2005 did not assume the

effect of 601,315 shares issuable on share options as their effects are anti-

dilutive for this period.

The calculation of diluted earnings per share for 2005 did not assume

the effect of 15,384,615 shares issuable upon the exercise of

convertible bonds as their effects are anti-dilutive for this period.

2004

2005

2004

SA cents

US cents

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

158

15 Earnings per ordinary share (continued)

Headline (loss) earnings

The (loss) profit attributable to equity shareholders has been adjusted

by the following to arrive at headline earnings:

728

(1,262)

(Loss) profit attributable to equity shareholders

(183)

108

200

–

Amortisation of goodwill (notes 18 and 19)

–

125

Impairment of intangible assets (note 7)

–

300

Impairment of tangible assets (note 7)

(88)

(39)

Profit on disposal of assets (note 7)

(5)

(13)

Taxation on items above

– current portion (note 13)

–

(79)

– deferred portion (note 13)

(12)

–

Impairment of investment in associates (note 19)

–

219

Net loss from discontinued operations (note 14)

937

(723)

Headline (loss) earnings

(98)

141

Cents per share

Headline (loss) earnings removes items of a capital nature from the

calculation of earnings per share, calculated in accordance with

circular 7/2002 issued by the South African Institute of Chartered

Accountants (SAICA).

The calculation of headline (loss) earnings per ordinary share is based

on headline losses of $98m, R723m (2004: headline earnings $141m,

R937m) and 264,635,634 (2004: 251,352,552) shares being the

373

(273)

weighted average number of ordinary shares in issue during the year.

(37)

16 Dividends

Ordinary shares

No. 95 of 335 SA cents per ordinary share was declared on

748

–

29 January 2004 and paid on 27 February 2004 (50 US cents per share).

–

111

No. 96 of 170 SA cents per ordinary share was declared on 29 July 2004

449

–

and paid on 27 August 2004 (26 US cents per share).

–

No. 97 of 180 SA cents per ordinary share was declared on

–

476

26 January 2005 and paid on 25 February 2005 (30 US cents per share).

–

No. 98 of 170 SA cents per ordinary share was declared on

–

450

27 July 2005 and paid on 26 August 2005 (26 US cents per share).

–

1,197

926

149

179

No. 99 of 62 SA cents per ordinary share was declared on

9 February 2006 and will be paid on 10 March 2006

(approximately 10 US cents per share). The actual rate of payment will

depend on the exchange rate on the date of currency conversion.

2004

2005

Figures in million

Notes

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

159

17.

Tangible assets

Mineral rights,

Mine dumps

and

development

Mine

exploration

Figures in million

costs

infrastructure

properties

Land

Total

US Dollars

Cost
Balance at 1 January 2004

2,391

1,622

546

4,580

Additions

– project

expenditure

185 34 26 –

245

– stay-in-business expenditure

246

–

329

Disposals (11)

(6)

(14)

–

(31)

Acquisition of subsidiaries (note 37)

1,208

511

873

–

2,592

Disposal of subsidiaries (note 37)

(5)

–

(5)

Transfers and other movements

243

(166)

Finance

costs

capitalised

(note

11 – – –

Translation

363 113 23

1 500

Balance at 31 December 2004

4,631

2,182

1,468

8,305

Accumulated amortisation
Balance at 1 January 2004

825

870

115

–

1,810

Amortisation for the year (notes 4, 10 and 36)

223

113

–

380

Impairments (note 7)

–

Disposals

(14) (5) (1) – (20)

Transfers and other movements

138

(95)

–

Translation 123

–

196

Balance at 31 December 2004

1,295

951

171

–

2,417

Net book value at 31 December 2004

3,336

1,231

1,297

5,888

Cost
Balance at 1 January 2005

4,631

2,182

1,468

8,305

Additions

– project expenditure

207

–

254

– stay-in-business expenditure

384

452

Disposals (50)

(9)

(3)

(1)

(63)

Transfers and other movements

(33)

Finance costs capitalised (note 8)

–

Translation (280)

(84)

(11)

–

(375)

Balance at 31 December 2005

4,928

2,244

1,449

8,648

Accumulated amortisation
Balance at 1 January 2005

1,295

951

171

–

2,417

Amortisation for the year (notes 4, 10 and 36)

310

148

–

503

Impairments (note 7)

–

Impairments reversal (note 14)

–

(17)

–

(17)

Disposals (50)

(5)

(3)

–

(58)

Transfers and other movements

(2)

–

(9)

–

(11)

Translation (92)

(53)

–

(135)

Balance at 31 December 2005

1,496

1,033

214

–

2,743

Net book value at 31 December 2005

3,432

1,211

1,235

5,905

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

160

17.

Tangible assets (continued)

Mineral rights,

Mine dumps

and

development

Mine

exploration

Figures in million

costs

infrastructure

properties

Land

Total

SA Rands

Cost
Balance at 1 January 2004

15,944

10,819

3,637

143

30,543

Additions
– project expenditure

1,197

217

164

–

1,578

– stay-in-business expenditure

1,584

478

2,119

Disposals

(73) (39) (90) (6)

(208)

Acquisition of subsidiaries (note 37)

8,695

2,953

5,991

–

17,639

Disposal of subsidiaries (note 37)

(36)

–

(36)

Transfers and other movements

1,581

(1,068)

558

Finance costs capitalised (note 8)

–

Translation

(2,818) (1,041) (1,500)

(17) (5,376)

Balance at 31 December 2004

26,141

12,319

8,286

138

46,884

Accumulated amortisation
Balance at 1 January 2004

5,504

5,796

776

12,077

Amortisation for the year (notes 4, 10 and 36)

1,445

700

278

–

2,423

Impairments (note 7)

–

Disposals (87)

(35)

(9)

–

(131)

Transfers and other movements

889

(609)

–

320

Translation

(435) (491) (126)

–

(1,052)

Balance at 31 December 2004

7,317

5,361

966

13,645

Net book value at 31 December 2004

18,824

6,958

7,320

137

33,239

Cost
Balance at 1 January 2005

26,141

12,319

8,286

138

46,884

Additions
– project expenditure

1,316

186

117

–

1,619

– stay-in-business expenditure

2,444

365

2,879

Disposals (327)

(61)

(23)

(4)

(415)

Transfers and other movements

127

441

(208)

387

Finance costs capitalised (note 8)

102

–

102

Translation 1,456

989

959

3,410

Balance at 31 December 2005

31,259

14,239

9,194

174

54,866

Accumulated amortisation
Balance at 1 January 2005

7,317

5,361

966

13,645

Amortisation for the year (notes 4, 10 and 36)

1,971

941

291

–

3,203

Impairments (note 7)

243

–

300

Impairments reversal (note 14)

–

(115)

–

(115)

Disposals (318)

(31)

(18)

–

(367)

Transfers and other movements

(14)

–

(56)

–

(70)

Translation 291

344

171

–

806

Balance at 31 December 2005

9,490

6,557

1,354

17,402

Net book value at 31 December 2005

21,769

7,682

7,840

173

37,464

Included in the amounts above for mine infrastructure are assets held under finance leases with a net book value of $49m, R312m
(2004: $78m, R439m).

The carrying value of assets encumbered by project finance amounts to nil (2004: $204m, R1,153m) (note 31).

The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is 10.65% (2004: 10.65%).

A register containing details of properties is available for inspection by shareholders or their duly authorised agents during business hours at
the registered office of the company.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

161

17 Tangible assets (continued)

Impairments include the following:

Ghana

–

255

Bibiani mine – cash generating unit

–

The life of mine at Bibiani was reassessed and reduced. As a result,

Bibiani’s recoverable amount does not support its carrying value

and an impairment loss was recognised. Recoverable amount was

determined based on the impairment assumptions detailed below.

South Africa – mine development costs

–

Goedgenoeg drilling and 1650 level decline drilling

–

An impairment charge was recognised during the assessment and

review of exploration properties as Goedgenoeg will not generate

future cash flows.

–

East of Bank Dyke at TauTona

–

Due to a change in original mine plan, the East of Bank Dyke

access development has been impaired as it will not generate

future cash flows.

Australia

The impairment of various mining assets and mineral rights based on

–

the net realisable value.

–

300

(note 7)

The above impairments relate to mining properties, mine development

costs and mine plant facilities and have been recognised in operating

special items (note 7). The recoverable amount was determined by

reference to value in use.

Impairment calculation

Management assumptions for the value in use of tangible assets and

goodwill include:

– revised life of mine plans which take into account production from

proved and probable reserves as well as value beyond proved and

probable reserves (refer pages 83 to 86 Mineral Resources and Ore

Reserves). For these purposes proved and probable Ore Reserves

were determined to be 63.3Moz as at 31 December 2005, using an

average gold price of $400/oz, A$556/oz and R86,808/kg for Ore

Reserves prepared in accordance with the JORC 2004, and

SAMREC 2000 codes and SEC requirements. Ore reserve

estimates are reviewed and updated annually and published in the

first quarter of each year;

– a ten-year externally sourced market-related forward gold curve

representing management’s best estimate of the future gold price

was applied to the 30 trading day average gold price for December

2005 of $505/oz. Thereafter, the estimated future gold price has

been escalated at 2.25% per annum. Where applicable the

estimated future gold price has been adjusted for the effects of

existing hedge contracts.

– a real pre-tax discount rate adjusted for country risk and project risk

for cash flows relating to mines not yet in commercial production

and deep level mining projects based on the discount rate

applicable to the long-term US dollar market rates;

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

162

17 Tangible assets (continued)

Impairment calculation (continued)

– foreign exchange rates are based on management’s estimates;

– cash flows used in impairment calculations are based on life of mine

plans which exceed five years for the majority of the mines;

– variable operating cash flows are increased at local CPI rates.

Real pre-tax discount rates applied in impairment calculations on assets

which had impairment indicators or on cash generating units which had

significant allocated goodwill are as follows:

South Africa

6.0%

Ghana

6.5% to 8.5%

Australia

5.4% to 6.3%

Tanzania

6.5%

Based on a real pre-tax discount rate of 6.5% at Bibiani the calculated
recoverable amount did not support the carrying values and an
impairment charge to write the assets down to a recoverable amount
was recognised in the income statement.

The group reviews and tests the carrying value of assets when events
or changes in circumstances suggest that the carrying amount may not
be recoverable. In addition, goodwill is tested on an annual basis for
impairment. Assets are grouped at the lowest level for which identifiable
cash flows are largely independent of cash flows of other assets and
liabilities. If there are indications that impairment may have occurred,
estimates are prepared of expected future cash flows for each group of
assets. Expected future cash flows used to determine the value in use
of goodwill and tangible assets are inherently uncertain and could
materially change over time. They are significantly affected by a number
of factors including reserves and production estimates, together with
economic factors such as spot and forward gold prices, discount rates,
foreign currency exchange rates, estimates of costs to produce reserves
and future capital expenditure.

Should management’s estimate of the future not reflect actual events,
further impairments may be identified. The factors affecting the
estimates include:
– changes in proved and probable Ore Reserves and Mineral

Resources;

– the grade of Ore Reserves and Mineral Resources may vary

significantly from time to time;

– differences between actual commodity prices and commodity price

assumptions;

– unforeseen operational issues at mine sites; and
– changes in capital, operating mining, processing and reclamation

costs and foreign exchange rates.

Based on an analysis carried out by the group in December 2005, the
carrying value and value in use of cash generating units that are most
sensitive to gold price, ounces, costs and discount rate assumptions are:

Carrying

Value in

Figures

value

use

in millions

US Dollars

SA Rands US Dollars SA Rands

Obuasi

1,480

9,391

1,591

10,095

Moab Khotsong

638

4,045

665

4,221

Tau Lekoa

103

656

129

816

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

163

17 Tangible assets (continued)

Should any of the assumptions used change adversely and the impact
is not mitigated by a change in other factors, this could result in an
impairment of the above assets.

The above three cash generating units do not have goodwill allocated to
them.

It is impracticable to disclose the extent of the possible effects of
changes in the assumptions for the future gold price and hence life of
mine plans at 31 December 2005 because these assumptions and
others used in impairment testing of tangible assets and goodwill are
inextricably linked. In addition, for those mines with a functional currency
other than the US dollar, movements in the US dollar exchange rate will
also be a critical factor in determining life of mine and production plans.

Therefore it is possible, based on existing knowledge, that outcomes
within the next financial year that are different from the assumptions
used in the impairment testing process for goodwill and tangible assets
could require a material adjustment to the carrying amounts disclosed
at 31 December 2005.

18 Intangible assets

Goodwill

Net carrying value

3,811

3,284

Balance at beginning of year

581

571

–

(1,096)

Elimination of accumulated amortisation

(194)

–

(527)

178

Translation

(14)

3,284

2,366

Balance at end of year

373

581

Accumulated amortisation

1,062

1,096

Balance at beginning of year

194

159

196

–

Amortisation (note 36)

–

(1,096)

Elimination of accumulated amortisation

(194)

–

(162)

–

Translation

–

1,096

–

Balance at end of year

–

194

2,188

2,366

Net book value

373

387

As from 1 January 2005, goodwill is no longer amortised but subject

to annual impairment testing.

Goodwill has been allocated to its respective cash generating units

(CGUs) where it is tested for impairment as part of the CGU (note 17).

Net carrying amount allocated to each of the cash generating unit:

615

692

Geita Gold Mining Limited

109

664

700

Sunrise Dam

110

117

664

700

Boddington

110

117

245

274

Other

2,188

2,366

373

387

2004

2005

Figures in million

Notes

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

164

18 Intangible assets (continued)

Royalty and tax rate concession

Cost

–

277

Balance at beginning of year

–

312

–

Acquisition of subsidiaries (note 37)

–

(35)

Translation

–

277

312

Balance at end of year

Accumulated amortisation

–

Balance at beginning of year

–

Amortisation (notes 4 and 36)

–

125

Impairments

(1)

(note 7)

–

(1)

–

Translation

–

145

Balance at end of year

270

167

Net book value

2,458

2,533

Total intangible assets

399

435

The government of Ghana agreed to a concession on the royalty

payments by maintaining a rate of 3% for 15 years from 2004.

(1)

The above impairment relates to the tax rate concession which was granted

at a rate of 30% for the Ashanti business combination in 2004. During 2005,

the corporate tax rate in Ghana was revised down to 25% and the tax rate

concession was fully impaired.

19 Investments in associates

– The group has a 25.0% (2004: 26.6%) interest in Oro Group

(Proprietary) Limited which is involved in the manufacture and

wholesale of jewellery. The year-end of Oro Group (Proprietary)

Limited is 31 March. Equity accounting is based on results to

30 September 2005.

– With effect 31 May 2005, AngloGold Ashanti increased its equity

interest to 29.9% (2004: 17.5%) in Trans-Siberian Gold plc, listed on

the LSE, which is involved in the exploration and development of

gold mines. The year-end of Trans-Siberian Gold plc is 31 December.

Equity accounting is based on results to 30 September 2005.

The carrying value of associates consists of:

Shares at carrying value brought forward

Share of retained earnings brought forward

–

(6)

(Loss) profit after taxation (note 9)

(1)

–

(11)

Impairment

(1)

(note 15)

(2)

–

Transfer of Trans-Siberian Gold plc from other investments (note 20)

–

Additional investment acquired in Trans-Siberian Gold plc

–

(4)

–

Amortisation of goodwill (note 36)

–

(1)

–

Translation

223

Carrying value

2004

2005

Figures in million

Notes

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

165

19 Investments in associates (continued)

The carrying value consists of the following:

Oro Group (Pty) Ltd

–

188

Trans-Siberian Gold plc

–

223

–

100

Fair value of listed associate

⁽²⁾

–

The group's effective share of certain balance sheet items of its

associates at 30 September 2005 is as follows:

Non-current assets

109

Current assets

189

Total assets

Non-current liabilities

Current liabilities

Total liabilities

129

Net assets

Reconciliation of the carrying value of investments in associates

with net assets:

129

Net assets

Goodwill

223

Carrying value

(1)

During the year, the Oro Group (Pty) Ltd investment was impaired. The
impairment tests considered the investment’s fair value and future cash flows.
An impairment of $2m, R11m (2004: nil) was recorded.

(2)

The recoverable amount (higher of value in use and fair value less cost to sell)
of the Trans-Siberian Gold plc investment exceeds its carrying amount which is
determined using the equity method as allowed by IAS 28.33. Accordingly, no
impairment was recognised. The market value at 31 December 2005 is less
than the amount determined as value in use.

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

166

20 Other investments

Listed investments – available-for-sale

167

Balance at beginning of year

150

Additions

–

(13)

Disposals

(2)

–

(98)

Transfer to investments in associates

(1)

(note 19)

(15)

–

Fair value adjustment on transfer to investment in associate (note 19)

–

Fair value adjustments

(15)

Translation

(1)

167

Balance at end of year

167

Fair value of listed investments

Available-for-sale listed investments consist of investments in ordinary

shares.

(1)

With effect from 31 May 2005, AngloGold Ashanti increased its equity

interest in Trans-Siberian Gold plc. to 29.9% (2004: 17.5%).

Unlisted investments – held to maturity

308

441

Balance at beginning of year

115

Additions

(2)

–

Impairment

–

(1)

Disposal

–

Interest earned

(13)

Translation

(7)

441

548

Balance at end of year

441

548

Directors' valuation of unlisted investments

Additions to unlisted investments consist of contributions to the

Environmental Rehabilitation Trust Fund and Environmental

Protection Bond. These investments are collateral for certain of the

group’s environmental obligations.

Unlisted investments include:

Fixed-term deposits required by legislation – Environmental

392

483

Rehabilitation Trust Fund administered by RMB Private Bank

Environmental Protection Bond – fixed-term deposit required by legislation

Other

441

548

608

645

Total other investments

102

107

608

645

Total valuation (note 40)

102

107

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

167

21 Interest in joint ventures

The group's effective share of income, expenses, assets and liabilities

of joint ventures, which is included in the consolidated financial

statements, is as follows:

Income statement

1,478

1,504

Gold income

236

230

(1,048)

(1,002)

Cost of sales

(158)

(163)

–

Non-hedge derivative gain

–

441

502

Operating profit

Interest received

–

(27)

(33)

Finance costs

(5)

(4)

416

473

Profit before taxation

(72)

(79)

Taxation

(12)

344

394

Profit after taxation

Balance sheet

Non-current assets

773

933

Tangible assets

147

137

133

Intangible assets

–

235

Inventories

–

Current assets

339

558

Inventories

361

336

Trade and other receivables

Cash and cash equivalents

1,614

2,271

Total assets

358

286

1,163

1,542

Equity

243

206

Non-current liabilities

141

Interest-bearing borrowings

197

Provisions

Current liabilities

141

297

Trade and other payables

107

165

Interest-bearing borrowings

1,614

2,271

Total equity and liabilities

358

286

Refer to page 246 for a list of joint ventures.

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

168

22 Inventories

Current portion of inventories

299

372

Gold in process

Gold on hand

396

483

Ore stockpiles

609

254

Heap-leach inventory

108

130

318

By-products

⁽¹⁾

1,496

1,499

Total metal inventories

236

266

789

937

Consumable stores

148

140

2,285

2,436

384

406

Non-current portion of inventories

124

736

Heap-leach inventory

116

391

Ore stockpiles

–

By-products

⁽¹⁾

–

202

1,171

Total metal inventories

184

–

Consumable stores

–

202

1,182

186

2,487

3,618

Total inventories

570

441

(1)

Uranium by-products of $10m, R64m are pledged to bankers in support
of an inventory repurchase programme (note 31)

23 Other non-current assets

Unsecured

Defined benefit post-retirement medical asset for Rand Refinery

employees (note 33)

–

AngloGold Ashanti Pension Fund (asset) (note 33)

–

Retiree Medical Plan for Nufcor South Africa employees (note 33)

–

Loans and receivables

Loans to joint venture partners – bearing interest at LIBOR + 2% per

annum repayable in full by December 2006

Other interest-bearing loans – repayable over 5 years at market

related rates

Other non-interest bearing loans – repayable on various dates

106

144

Less: Current portion of other non-current assets included in

current assets

101

(note 40)

Pledged

–

Other loans and receivables

–

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

169

24 Trade and other receivables

Non-current

Prepayments and accrued income

Recoverable tax, rebates, levies and duties

124

Current

587

645

Trade debtors (note 40)

102

104

458

371

Prepayments and accrued income

139

Interest receivable (note 40)

–

437

530

Recoverable tax, rebates, levies and duties

Other debtors (note 40)

1,700

1,589

250

302

Trade debtors are non-interest-bearing and are generally on

current terms less than 90 days.

There is no concentration of credit risk with respect to trade receivables,

as the group has a large number of internationally dispersed customers.

There is a concentration of risk in respect of recoverable value

added tax and fuel duties from the Malian government.

Recoverable value added tax due from the Malian government to the

group amounts to $25m, R159m at 31 December 2005 (31 December

2004: $14m, R79m). The last audited value added tax return was for the

period ended 30 June, 2005 and at the balance sheet date $12m, R76m

was still outstanding. $13m, R83m is still subject to audit. The accounting

processes for the unaudited amount are in accordance with the

processes advised by the Malian government in terms of the previous

audits. The government of Mali is a shareholder in all of the group’s

entities in Mali and has promised to provide a repayment plan for the

amounts due. Due to this uncertainty, the amounts, although reported as

current assets, may take longer than 12 months to be received.

Reimbursable fuel duties from the Malian government to the group

amount to $13m, R82m at 31 December 2005 (31 December 2004:

$13m, R73m). Fuel duties are required to be submitted before

31 January of the following year and are subject to authorisation by,

firstly, the Department of Mining, and secondly, the Customs and

Excise authorities. The Customs and Excise department has approved

$7m, R44m which is still outstanding, while $6m, R38m is still subject

to authorisation. The accounting processes for the unauthorised

amount are in accordance with the processes advised by the Malian

government in terms of the previous authorisations. The government

of Mali is a shareholder in all of the group’s entities in Mali and has

promised to provide a repayment plan for the amounts due. Due to

this uncertainty the amounts, although reported as current assets,

may take longer than 12 months to be received.

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

170

25 Cash restricted for use

Cash restricted by the prudential solvency requirements

The group is restricted from utilising available funds in Geita

Management Company Limited, up to a maximum of $25m in respect

106

of outstanding hedges

Other

148

(note 40)

26 Cash and cash equivalents

847

1,020

Cash and deposits on call

161

150

783

308

Money market instruments

139

1,630

1,328

(note 40)

209

289

27 Non-current assets held for sale

Effective 30 June 2005, the investment in the Weltevreden mining

participating rights was classified as held for sale. This investment was

previously recognised as a tangible asset. Weltevreden participation

rights were sold to Aflease Gold and Uranium Resources Limited on

15 June 2005. On 19 December 2005, Aflease was acquired by SXR

Uranium One (formerly Southern Cross Inc.). In terms of the

agreement, the price will be paid in the form of shares to be issued to

AngloGold Ashanti. This will take place when the conditions precedent

to the agreement have been met. The conditions are that the

Weltevreden rights are part of a mining rights conversion application

and upon the government granting the conversion rights, AngloGold

Ashanti will cede the Weltevreden Mineral rights to Aflease. The

Director-General of Minerals and Energy notified the company that the

new order mining rights have been granted to AngloGold Ashanti,

which are expected to be received during 2006. AngloGold Ashanti is

awaiting the registration certificate. The related SXR Uranium One

shares will then be issued to AngloGold Ashanti as full settlement

–

100

of the purchase price.

–

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

171

28 Share capital and premium

Share capital
Authorised

100

400,000,000 ordinary shares of 25 SA cents each

2,000,000 A redeemable preference shares of 50 SA cents each

–

5,000,000 B redeemable preference shares of 1 SA cent each

–

101

Issued and fully paid
264,938,432 ordinary shares of 25 SA cents each (2004: 264,462,894

ordinary shares of 25 SA cents each)

2,000,000 A redeemable preference shares of 50 SA cents each

–

778,896 B redeemable preference shares of 1 SA cent each

–

(1)

Less: Redeemable preference shares held within the group

–

Share premium

9,924

19,233

Balance at the beginning of year

3,405

1,495

9,309

Ordinary shares issued

1,367

–

Translation

(369)

543

19,233

19,293

Balance at the end of the year

3,045

3,405

(312)

Less: Held within the group

(53)

18,921

18,981

2,992

3,352

18,987

19,047

Share capital and premium

3,002

3,364

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

172

Retained earnings and other reserves

Non-

Foreign

Other

distri-

currency

Actuarial

compre-

Retained butable

translation

gains

hensive

Figures in million

earnings

⁽¹⁾

reserves

⁽²⁾

reserve

(losses)

⁽³⁾

income

⁽⁴⁾

Total

US Dollars

Balance at December 2003 as previously reported

577 21 (113)

– (307)

178

Change in accounting policy for translation of retained

earnings (IAS 21 revised)

(220)

220

–

Change in accounting policy for actuarial

gains and losses

(18)

As restated

357

107

(18)

(307)

160

Actuarial gains and losses recognised

(3)

Deferred taxation recognised directly in equity (note 34)

Profit attributable to equity shareholders

108

Dividends (note 16)

(179)

Net loss on cash flow hedges removed from

equity and reported in income

134 134

Net gain on cash flow hedges

48 48

Deferred taxation on cash flow hedges (note 34)

(43)

Gain on available-for-sale financial assets

2 2

Translation 3

(424)

(2)

(18)

(441)

Balance at December 2004 (restated)

⁽⁵⁾

286 24

(317)

(22)

(184)

(213)

Actuarial gains and losses recognised

(27)

Deferred taxation recognised directly in equity (note 34)

Loss attributable to equity shareholders

(183)

Dividends (note 16)

(149)

Net loss on cash flow hedges removed from

equity and reported in income

Net loss on cash flow hedges

(200)

Deferred taxation on cash flow hedges (note 34)

Gain on available-for-sale financial assets

Share-based payment expense

Translation (2)

250

294

Balance at December 2005

(46)

(67)

(36)

(261)

(388)

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

173

Retained earnings and other reserves (continued)

Non-

Foreign

Other

distri-

currency

Actuarial

compre-

Retained butable

translation

gains

hensive

Figures in million

earnings

⁽¹⁾

reserves

⁽²⁾

reserve

(losses)

⁽³⁾

income

⁽⁴⁾

Total

SA Rands

Balance at December 2003 as previously reported

3,848

138 (755)

– (2,047) 1,184

Change in accounting policy for actuarial

gains and losses

(112) (112)

As restated

3,848

138

(755)

(112)

(2,047)

1,072

Actuarial gains and losses recognised

(15)

Deferred taxation recognised directly in equity (note 34)

Profit attributable to equity shareholders

728

Dividends (note 16)

(1,197)

Net loss on cash flow hedges removed from

equity and reported in income

864 864

Net gain on cash flow hedges

239 239

Deferred taxation on cash flow hedges (note 34)

(291)

Gain on available-for-sale financial assets

12 12

Translation

(2,797) 183

(2,614)

Balance at December 2004 (restated)

(⁵⁾

3,379

138 (3,552) (122) (1,040) (1,197)

Actuarial gains and losses recognised

(173)

Deferred taxation recognised directly in equity (note 34)

Loss attributable to equity shareholders

(1,262)

Dividends (note 16)

(926)

Net loss on cash flow hedges removed from

equity and reported in income

387

Net loss on cash flow hedges

(1,272)

Deferred taxation on cash flow hedges (note 34)

377

Gain on available-for-sale financial assets

Share-based payment expense

Translation

1,642

(139)

1,503

Balance at December 2005

1,191

138

(1,910)

(227)

(1,655)

(2,463)

(1)

$297m, R1,881m of retained earnings arising at the joint venture operations and certain subsidiaries may not be remitted without third party shareholder consent.

(2)

Non-distributable reserves comprise a surplus on disposal of company shares of $22m, R141m (2004: $25m, R141m) and other transfers.

(3)

With the adoption of IAS 19 revised, actuarial gains and losses are accounted for through equity reserves. Actuarial gains and losses arise from a change in assumption parameters and the difference between the actual and expected return on plan assets.

(4)

Other comprehensive income represents the effective portion of fair value gains or losses in respect of cash flow hedges until the underlying transaction occurs, upon which the gains or losses are recognised in earnings, fair value gains or losses on available-for-sale financial assets and the equity item for share-based payments.

(5)

The 2004 opening balances and comparative amounts have been restated in terms of the effects of changes in foreign exchange rates (IAS 21 revised).

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

174

30 Minority interests

354

327

Balance at beginning of year

123

146

Profit for the year

(125)

Dividends paid

(20)

(19)

–

At acquisition of subsidiaries (note 37)

–

Net loss on cash flow hedges removed from equity and reported

in income

–

(3)

(9)

Net loss on cash flow hedges

(2)

–

(43)

Translation

(1)

327

374

Balance at end of year

31 Borrowings

Unsecured

5,191

5,867

Convertible Bonds

(1)

925

920

Semi-annual coupons are paid at 2.375% per annum. The bonds are
convertible at the holders’ option into ADSs up to February 2009 and are
dollar-based. The bonds are convertible at a price of $65.00 per ADS.

If the bonds have not been converted by 20 February 2009, they will
be redeemed at par on 27 February 2009. AngloGold Ashanti
Holdings plc has the option of calling an early redemption of all the
bonds three years after their issuance, if the price of the ADSs exceeds
130% of the conversion price for more than 20 days during any period
of 30-consecutive trading days.

–

2,927

Syndicated loan facility ($700m)

461

–

Interest charged at LIBOR plus 0.4% per annum. This dollar-based
loan is repayable in January 2008 and is subject to debt covenant
arrangements for which no default event occurred.

2,057

2,062

Corporate Bond

(2)

325

364

Semi-annual coupons are payable at 10.5% per annum.
The bond is repayable on 28 August 2008 and is rand-based.

–

818

Money-market short-term borrowings at market-related interest rates

129

–

are rand-based

124

RMB International (Dublin) Limited

Interest charged at LIBOR plus 0.82% per annum. Loan is of a
short-term nature, has no fixed repayment date and is dollar-based.

Bank Belgolaise

Interest charged at LIBOR plus 1.5% per annum. Loan is repayable
in 24 equal monthly instalments commencing October 2005 and is
dollar-based.

Government of Mali

Interest charged at LIBOR plus 2% per annum. Loans are repayable
by December 2007 and are dollar-based.

Precious Fields Estates Company Ltd

Annuity based repayments expiring October 2006. Loan is dollar-based.

Investec

Interest charged at 6.5% per annum. Loan is repayable in half-yearly
instalments terminating in June 2006 and is dollar-based.

–

Bank overdraft at market related rates is rand-based

–

1,498

–

Syndicated loan facility ($600m)

–

265

Interest charged at LIBOR plus 0.7% per annum. Loan was repaid in
February 2005, and was dollar-based.

–

Iduapriem – Syndicated Project Finance

–

Interest charged at LIBOR plus 2% per annum. Loan was repaid
in February 2005 and was dollar-based.

8,945

11,849

Total unsecured borrowings

1,868

1,584

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

175

31 Borrowings (continued)

Secured

Finance leases

Senstar Capital Corporation

Interest charged at an average rate of 6.83% per annum. Loans are

repayable in monthly instalments terminating in November 2009 and

are dollar-based. The equipment financed is used as security for these

loans.

Rolls Royce

Interest is charged at a variable rate of approximately 20% per annum,

based on the lease contract. Loan is repayable in monthly instalments

terminating in March 2011 and is dollar-based. The equipment

financed is used as security for this loan.

Kudu Finance Company

Interest charged at LIBOR plus 2% per annum. Loan is repayable in

monthly instalments terminating in December 2010 and is dollar-

based. The equipment financed is used as security for this loan.

Other loans

–

Nulux Nukem Luxemburg GmbH

–

Uranium repurchase agreement, dollar-based, with repurchases

commencing in December 2006 and terminating in December 2008.

Rate of finance is 5.42% per annum. Uranium inventory is secured

against the contract.

–

Geita Syndicated Project Finance

–

Interest charged at LIBOR plus 1.95% per annum. Loan was repaid

in June 2005 and was dollar-based. Secured by pledge over the

shares in the project company.

9,062

12,015

Total borrowings

1,894

1,605

1,800

1,190

Less: Current portion of borrowings included in current liabilities

188

319

7,262

10,825

Total long-term borrowings

1,706

1,286

Amounts falling due

1,800

1,190

Within one year

188

319

Between one and two years

7,220

10,757

Between two and five years

1,696

1,279

After five years

–

9,062

12,015

(note 40)

1,894

1,605

Currency

The currencies in which the borrowings are denominated are as follows:

7,005

9,132

US dollars

1,440

1,241

2,057

2,883

SA rands

454

364

9,062

12,015

1,894

1,605

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

176

31 Borrowings (continued)

Undrawn facilities
Undrawn borrowing facilities as at 31 December 2005 are as follows:

–

1,555

Syndicated loan ($700m) – US dollar

245

–

266

Amalgamated Banks of South Africa Limited – US dollar

–

1,891

–

Syndicated loan ($600m) – US dollar

–

335

Citibank, N.A. – US dollar

RMB International (Dublin) Limited – US dollar

120

107

FirstRand Bank Limited – SA rands

Nedbank Limited – SA rands

–

Amalgamated Banks of South Africa Limited – SA rands

–

Commerzbank AG – SA rands

221

232

Australia and New Zealand Banking Group Limited – Australian dollar

2,381

2,339

369

421

(1)

Convertible Bonds

5,645

6,345

Senior unsecured fixed-rate bonds

1,000

444

529

Less: unamortised discount and bond issue costs

Less: fair value hedge accounting adjustment as a result of the

–

interest rate swap

–

5,145

5,816

917

912

Add: accrued interest

5,191

5,867

925

920

(2)

Corporate Bond

2,000

Senior unsecured fixed-rate bond

315

354

Less: unamortised discount and bond issue costs

1,984

1,989

313

351

Add: accrued interest

2,057

2,062

325

364

32 Environmental rehabilitation and other provisions

Environmental rehabilitation obligations
Provision for decommissioning

326

566

Balance at beginning of year

100

148

–

Acquisition of subsidiaries (note 37)

–

282

Change in estimates

(1)

Unwinding of decommissioning obligation (note 8)

(43)

Translation

(4)

566

908

Balance at end of year

143

100

Provision for restoration

562

658

Balance at beginning of year

117

202

–

Acquisition of subsidiaries (note 37)

–

(10)

–

Disposal of subsidiaries (note 37)

–

(1)

116

149

Charge to income statement

(39)

408

Change in estimates

(1)

(6)

–

Unwinding of restoration obligation (note 8)

–

(90)

(65)

Utilised during the year

(10)

(14)

(83)

Translation

(6)

658

1,235

Balance at end of year

194

117

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

177

32 Environmental rehabilitation and other

provisions (continued)

Other provisions

Balance at beginning of year

101

Charge to income statement

(52)

(36)

Utilised during the year

(6)

(8)

(12)

Translation

–

122

Balance at end of year

Other provisions comprise the following:

119

Provision for labour and civil claim court settlements in South America

(2)

–

Provision for employee compensation claims in Australia

(3)

–

122

(1)

The change in estimates relates to changes in laws and regulations governing the protection of the environment and factors relative to rehabilitation estimates and a change in the quantities of material in reserves and a corresponding change in the life of mine plan. These provisions are anticipated to unwind beyond the end of the
life of mine.

(2)

Comprises claims filed by former employees in respect of loss of employment, work-related accident injuries and diseases, government fiscal claims relating to levies and surcharges and closure costs of old tailings operations. The liability is anticipated to unwind over the next two to five-year period.

(3)

Comprises workers compensation claims filed by employees in Australia with regard to work-related incidents. The liability is anticipated to unwind over the next three to five-year period.

1,294

2,265

Total environmental rehabilitation and other provisions

356

230

33 Provision for pension and post-retirement benefits

Defined benefit plans

The group has made provision for pension provident and medical

schemes covering substantially all employees. The retirement

schemes consist of the following:

(51)

AngloGold Ashanti Pension Fund (asset)

(8)

–

South American Brasil Fundambrás Pension Plan

–

Ashanti Retired Staff Pension Plan

–

Obuasi Mines Staff Pension Scheme

Post-retirement medical scheme for AngloGold Ashanti South

924

1,172

African employees

185

164

(14)

(16)

Post-retirement medical scheme for Rand Refinery employees (asset)

(2)

Retiree Medical Plan for North American employees

Supplemental Employee Retirement Plan (SERP) for North America

(USA) Inc employees

–

(1)

Retiree Medical Plan for Nufcor South Africa employees (asset)

–

1,098

1,181

Sub-total

187

195

Transferred to other non-current assets (note 23):

–

AngloGold Ashanti Pension Fund

–

Retiree Medical Plan for Nufcor South Africa employees

–

Post-retirement medical scheme for Rand Refinery employees

1,112

1,249

197

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

178

33 Provision for pension and post-retirement

benefits (continued)

AngloGold Ashanti Pension Fund

The plan is evaluated by independent actuaries on an annual basis as

at 31 December of each year and a formal statutory valuation required

by legislation as at 31 December 2005 will be completed during the

first six months of 2006. In arriving at their conclusions, the actuaries

took into account reasonable long-term estimates of inflation,

increases in wages, salaries and pension as well as returns on

investments.

All South African pension funds are governed by the Pension Funds

Act of 1956 as amended.

Information with respect to the AngloGold Ashanti Pension

Fund is as follows:

Change in benefit obligation

1,089

1,219

Balance at beginning of year

216

163

Current service cost

Interest cost

Participants’ contributions

200

Actuarial loss

(81)

(152)

Benefits paid

(24)

(13)

–

Translation

(23)

1,219

1,408

Balance at end of year

222

216

Change in plan assets

920

1,150

Balance at beginning of year

204

138

106

Expected return on plan assets

124

260

Actuarial gain

Company contributions

Participants’ contributions

(81)

(152)

Benefits paid

(24)

(13)

–

Translation

(22)

1,150

1,459

Balance at end of year

230

204

(69)

Funded status at end of year

(12)

(69)

Net amount recognised

(12)

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

179

33 Provision for pension and post-retirement

benefits (continued)

Pension benefit obligation

1,219

1,408

Benefit obligation

222

216

1,150

1,459

Fair value of plan assets

230

204

Components of net periodic benefit cost

Current service cost

Interest cost

(95)

(106)

Expected return on assets

(16)

(15)

Net periodic benefit cost

Assumptions
Assumptions used to determine benefit obligations at the end
of the year are as follows:
Discount rate

7.75%

7.50%

Rate of compensation increase

(1)

5.00%

Expected long-term return on plan assets

10.14%

7.50%

Pension increase

4.05%

2.90%

(1)

The short-term compensation rate increase is 5% and the long-term rate
is 5.25%.

The expected long-term return on plan assets is determined using the
after tax yields of the various asset classes as a guide.

Plan assets
AngloGold Ashanti’s pension plan weighted-average asset allocations
at the end of the year, by asset category, are as follows:

Asset category
Equity securities

69%

65%

Debt securities

30%

32%

Other

100%

Investment policy
The Trustees have adopted a long-term horizon in formulating the Fund’s
investment strategy, which is consistent with the term of the Fund’s
liabilities. The investment strategy aims to provide a reasonable return
relative to inflation across a range of market conditions.

The Trustees have adopted different strategic asset allocations for the
assets backing pensioner and active member liabilities. The strategic asset
allocation defines what proportion of the Fund’s assets should be invested
in each major asset class. The Trustees have then selected specialist
investment managers to manage the assets in each asset class according
to specific performance mandates instituted by the Trustees.

The Trustees have also put in place a detailed Statement of Investment
Principles that sets out the Fund’s overall investment philosophy and
strategy.

Fund returns are calculated on a monthly basis, and the performance of
the managers and Fund as a whole is formally reviewed by the Fund’s
Investment Sub-Committee at least every six months.

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

180

Provision for pension and post-retirement benefits (continued)

2005

2004

Percentage

Number

of total

of shares

assets

Fair value

assets

Fair value

US Dollars million

Related parties
Investments held in related parties are summarised
as follows:

Equity securities
Holding company Anglo American plc

821,513

11.9%

2.2%

Fellow subsidiaries of Anglo American plc group
Anglo Platinum Group

432,310

13.5%

0.1%

–

The Tongaat-Hulett Group

189,975

1.1%

–

AngloGold Ashanti

36,936

0.8%

0.3%

Other investments exceeding 5% of total plan assets

Bonds
RSA 2015 Government Bonds 13.5%

5.4%

–

RSA 2010 Government Bonds 13%

7.8%

8.5%

SA Rands million

Related parties
Investments held in related parties are summarised
as follows:

Equity securities
Holding company Anglo American plc

821,513

11.9%

174

2.2%

Fellow subsidiaries of Anglo American plc group
Anglo Platinum Group

432,310

13.5%

198

0.1%

–

The Tongaat-Hulett Group

189,975

1.1%

–

AngloGold Ashanti

36,936

0.8%

0.3%

398

Other investments exceeding 5% of total plan assets

Bonds
RSA 2015 Government Bonds 13.5%

5.4%

113

–

RSA 2010 Government Bonds 13%

7.8%

8.5%

192

Cash flows
Contributions
The company expects to contribute $7m, R46m (2005: $13m, R82m) to its pension plan in 2006. The reduction arises as additional
contributions may no longer be required as the fund is likely to be fully funded at its next statutory actuarial valuation.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

33 Provision for pension and post-retirement

benefits (continued)

Estimated future benefit payments

The following pension benefit payments, which reflect the expected

future service, as appropriate, are expected to be paid:

2006

2007

2008

2009

2010

939

Thereafter

147

South American Brasil Fundambrás pension plan

On 30 November 1998, the defined benefit fund was converted to a

defined contribution fund with an actuarial net liability of $6m, R51m.

This liability was revised annually by Mercer, the plan's actuary. The

transfer of funds has been approved by the governmental SPC agency

and the actuarial net liability of $10m, R61m has been funded and

transferred to a defined contribution plan on 30 September 2005.

Information with respect to the South American Brasil Fundambrás

pension plan is as follows:

Change in benefit obligation

112

126

Balance at beginning of year

Interest cost

Actuarial loss

–

(160)

Settlements and curtailments

(25)

–

(3)

(6)

Benefits paid

(1)

(10)

Translation

126

–

Balance at end of year

–

Change in plan assets

Fair value of plan assets at beginning of year

Expected return on plan assets

–

Actuarial gain

–

(99)

Settlements and curtailments

(15)

–

(3)

(6)

Benefits paid

(1)

(7)

Translation

–

Fair value of plan assets at end of year

–

(40)

–

Funded status at end of year

–

(7)

(40)

–

Net amount recognised

–

(7)

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

181

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

182

33 Provision for pension and post-retirement

benefits (continued)

Pension benefit obligation

126

–

Benefit obligation

–

Fair value of plan assets

–

Components of net periodic benefit cost

Interest cost

(8)

Expected return on plan assets

(1)

Net periodic benefit cost

Assumptions

Assumptions used to determine benefit obligations at the end of

the year are as follows:

Discount rate

N/A

11.30%

Rate of compensation increase

N/A

7.10%

Expected long-term return on plan assets

N/A

11.30%

Pension increase

N/A

5.00%

Plan assets

The Brasil Fundambrás defined benefit pension plan weighted-average

asset allocations, by asset category, at the end of the year are as follows:

Asset category

Debt securities

–

95%

Property

–

Cash

–

100%

No valuation is necessary at 31 December 2005 as the fund has

converted during the year to a defined contribution plan.

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

183

33 Provision for pension and post-retirement

benefits (continued)

Cash flows

Contributions

No company or participant contributions were made to this fund. The

fund has been discontinued and the fund assets transferred to a

defined contribution fund.

Estimated future benefit payments

There are no future benefit payments as the fund was terminated on

30 September 2005.

Ashanti Retired Staff pension plan

The pension scheme provides a retirement benefit to former Ashanti

employees that were based at the former London office. The scheme

is closed to new members and participants are either retired or are

deferred members. The plan is evaluated by actuaries on an annual

basis using the projected unit credit funding method. No contributions

are made to the plan and it is funded with a marginal shortfall of

$0.2m, R1m.

Information with respect to the Ashanti Retired Staff pension

plan is as follows:

Change in benefit obligation

–

Balance at beginning of year

–

Acquisition of subsidiary

–

Interest cost

–

Actuarial loss

–

(1)

Translation

–

Balance at end of year

Change in plan assets

–

Fair value of plan assets at beginning of year

–

Acquisition of subsidiary

–

Expected return on plan assets

–

Actuarial gain

–

Fair value of plan assets at end of year

(2)

(1)

Funded status at end of year

–

(2)

(1)

Net amount recognised

–

Pension benefit obligation

Benefit obligation

Fair value of plan assets

Components of net periodic benefit cost

–

Interest cost

–

(1)

Expected return on plan assets

–

Net periodic benefit cost

–

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

184

33 Provision for pension and post-retirement

benefits (continued)

Assumptions

Assumptions used to determine benefit obligations at the end

of the year are as follows:

Discount rate

5.00%

5.80%

Expected long-term return on plan assets

6.07%

5.80%

Pension increase

2.50%

The expected long-term return on plan assets is determined using

the after tax return of domestic bonds and fixed-term investments.

Plan assets

The Ashanti Retired Staff defined benefit pension plan weighted-

average asset allocations as at the end of the year, by asset category

are as follows:

Asset category

Equity securities

51%

53%

Debt securities

41%

43%

Property

Cash

100%

Investment policy

The general policy of the fund is to select investments that will achieve

an optimal return on the plan assets.

No investments are made in related party entities.

Cash flows

Contributions

No contributions are made to this fund since the fund is closed to

new members and the current members are retired or deferred.

Estimated future benefit payments

The following benefit payments, which reflect the expected future

service, as appropriate, are expected to be paid:

2006

–

2007

–

2008

–

2009

–

2010

–

Thereafter

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

185

33 Provision for pension and post-retirement

benefits (continued)

Obuasi Mines Staff Pension Scheme

The scheme provides monthly payments in Ghanaian currency

(indexed to the US dollar) to retirees until death. The benefits under the

scheme are based on the years of service and the compensation

levels of the covered retirees. The scheme is closed to new members

and all the scheme participants are retired. The scheme is unfunded

and accordingly, no assets related to the scheme are recorded. The

scheme is evaluated by actuaries on an annual basis.

Information with respect to the Obuasi Mines Staff Pension

Scheme is as follows:

Change in benefit obligation

–

Balance at beginning of year

–

Acquisition of subsidiary

–

Interest cost

–

(7)

Actuarial gain

(1)

–

(5)

Benefits paid

(1)

–

(13)

Translation

–

Balance at end of year

(60)

(58)

Funded status at end of year

(9)

(11)

(60)

(58)

Net amount recognised

(9)

(11)

Pension benefit obligation

Benefit obligation

–

Fair value of plan assets

–

Components of net periodic benefit cost

–

Interest cost

–

Assumptions

Assumptions used to determine benefit obligations at the end

of the year are as follows:

Discount rate

4.0%

Rate of compensation increase

N/A

Pension increase

3.0%

4.5%

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

186

33 Provision for pension and post-retirement

benefits (continued)

Cash flows

Contributions

No contributions are made to this fund since the fund is closed to new

members and the current members are all retired.

Estimated future benefit payments

The following pension benefit payments, which reflect the expected

future service, as appropriate, are expected to be paid:

2006

2007

2008

2009

2010

Thereafter

Post-retirement medical scheme for AngloGold Ashanti South

African employees

The provision for post-retirement medical funding represents the

provision for health care benefits for employees and retired employees

and their registered dependants.

The post-retirement benefit costs are assessed in accordance with the

advice of independent professionally qualified actuaries. The actuarial

method used is the projected unit credit funding method. This scheme

is unfunded. The last valuation was performed as at 31 December

2005.

Information with respect to the defined benefit liability is as

follows:

Change in benefit obligation

850

924

Benefit obligation at beginning of year

164

128

Current service cost

Interest cost

Participants’ contributions

(156)

(105)

Benefits paid

(16)

(24)

–

Plan amendments

–

236

Actuarial loss

–

Translation

(18)

924

1,172

Balance at end of year

185

164

(924)

(1,172)

Funded status at end of year

(185)

(164)

(924)

(1,172)

Net amount recognised

(185)

(164)

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

187

33 Provision for pension and post-retirement

benefits (continued)

Components of net periodic benefit cost

Current service cost

Interest cost

–

Amortisation of past service cost

–

Net periodic benefit cost

The assumptions used in calculating the above amounts
at year end are:
Discount rate

7.75%

9.00%

Expected increase in health care costs

5.00%

Assumed health care cost trend rates at 31 December:
Health care cost trend assumed for next year

5.00%

Rate to which the cost trend is assumed to decline (the ultimate trend rate)

5.00%

Year that the rate reaches the ultimate trend

N/A

Assumed health care cost trend rates have a significant effect on
the amounts reported for health care plans. A 1% point change in

1% point

assumed health care cost trend rates would have the

1% point

increase

following effect:

increase

Effect on total service and interest cost

125

Effect on post-retirement benefit obligation

1% point

decrease

(9)

Effect on total service and interest cost

(1)

(107)

Effect on post-retirement benefit obligation

(16)

Cash flows
Post-retirement medical plan
AngloGold Ashanti expects to contribute $13m, R82m (2005:
$12m, R75m) to the post-retirement medical plan in 2006.

Estimated future benefit payments
The following medical benefit payments, which reflect the expected
future service, as appropriate, are expected to be paid:

2006

2007

2008

2009

100

2010

719

Thereafter

113

Post-retirement medical scheme for Rand Refinery Limited
employees
The Rand Refinery Retiree Medical Plan (Medipref) is a non-
contributory defined benefit plan in respect of certain past qualifying
employees. The accumulated post-employment medical aid obligation
was determined by independent actuaries in September 2005 using
the projected unit credit funding method. Movements that could
impact the valuation between the interim date and the date of the
balance sheet have been considered. The plan is fully funded and is
evaluated by independent actuaries on an annual basis.

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

188

33 Provision for pension and post-retirement

benefits (continued)

Information with respect to the post-retirement medical plan and

obligation for the Rand Refinery Ltd past employees is as follows:

Change in benefit obligation

–

Balance at beginning of year

–

Transfer in

–

Interest cost

–

(1)

Benefits paid

–

(4)

–

Actuarial gain

–

Balance at end of year

Change in plan assets

–

Fair value of plan assets at beginning of year

–

Transfer in

–

Expected return on plan assets

–

(1)

Benefits paid

–

Fair value of plan assets at end of year

Funded status at end of year

Net amount recognised (note 23)

Components of net periodic benefit cost

Interest cost

–

(2)

(3)

Expected return on plan assets

–

(2)

Net periodic benefit cost

–

Assumptions

Assumptions used at year end are as follows:

Discount rate

7.75%

10.00%

Expected increase in health care costs

5.75%

8.00%

Expected return on plan assets

7.26%

10.00%

Assumed health care cost trend rates at 31 December:

Health care cost trend assumed for next year

5.75%

8.00%

Rate to which the cost trend is assumed to decline

(the ultimate trend rate)

5.75%

8.00%

Year that the rate reaches the ultimate trend

N/A

Assumed health care cost trend rates have a significant effect on the

1% point

amounts reported for health care plans. A 1% point change in assumed

1% point

increase

health care cost trend rates would have the following effect:

increase

–

Effect on total service and interest cost

–

Effect on post-retirement benefit obligation

–

1% point

decrease

–

Effect on total service and interest cost

–

(1)

Effect on post-retirement benefit obligation

–

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

189

33 Provision for pension and post-retirement

benefits (continued)

Plan assets

The weighted-average asset allocation of the Rand Refinery post

retirement medical fund as at the end of the year, by asset category, is

as follows:

Asset category

Debt securities

75%

90%

Cash

25%

10%

100%

Cash flows

Post-retirement medical plan

Rand Refinery Limited does not make a contribution to the scheme

as the scheme is closed to new members and the current members

are retired.

Estimated future benefit payments

The following medical benefit payments, which reflect the expected

future service, as appropriate, are expected to be paid:

2006

–

2007

–

2008

–

2009

–

2010

–

Thereafter

North America Retiree Medical Plan

AngloGold Ashanti USA provides health care and life insurance

benefits for certain retired employees under the AngloGold North

America Retiree Medical Plan (the Retiree Medical Plan). With effect

from 31 December 1999, no additional employees were eligible to

receive post-retirement benefits under the Retiree Medical Plan.

Curtailment accounting was applied at 31 December 1999.

The Retiree Medical Plan is a non-contributory defined benefit plan.

This plan is evaluated by independent actuaries on an annual basis.

It was last evaluated by independent actuaries in September 2005

who took into account reasonable long-term estimates of increases in

health care costs and mortality rates in determining the obligations of

AngloGold Ashanti USA under the Retiree Medical Plan. The

evaluation of the Retiree Medical Plan reflected liabilities of $2m, R12m

(2004: $2m, R11m). The Retiree Medical Plan is an unfunded plan.

The Retiree Medical Plan is evaluated using the projected unit credit

funding method. The company does not share in future cost increases

and therefore the rate of compensation increase is not applicable.

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

190

33 Provision for pension and post-retirement

benefits (continued)

Information with respect to the Retiree Medical Plan is as
follows:

Change in benefit obligation

Balance at beginning of year

Interest cost

–

(1)

Benefit paid

–

(2)

Translation

–

Balance at end of year

(11)

(12)

Funded status at end of year

(2)

(11)

(12)

Net amount recognised

(2)

Net periodic pension and post-retirement benefit costs include:

Interest cost

–

Net periodic benefit cost

–

Assumptions used in calculating benefit obligations at the end of
the year are as follows:
Discount rate

5.5%

6.0%

Benefits are fixed and independent from inflation and consequently
health care increases are not relevant.

Assumed health care cost trend rates have a significant effect on the

1% point

amounts reported for health care plans. A 1% point change in

1% point

increase

assumed health care cost trend rates would have the following effect:

increase

–

Effect on total service and interest cost

–

Effect on post-retirement benefit obligation

–

1% point

decrease

–

Effect on total service and interest cost

–

(1)

Effect on post-retirement benefit obligation

–

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

191

33 Provision for pension and post-retirement

benefits (continued)

Cash flows
Contributions
No contributions are made to this fund since the fund is closed to new
members and the current members are all retired.

Estimated future benefit payments
The following pension benefit payments, which reflect the expected
future service, as appropriate, are expected to be paid:

2006

–

2007

–

2008

–

2009

–

2010

–

Thereafter

North America Supplemental Employee Retirement Plan
Certain former employees of Minorco (USA) Inc. were covered under
the Minorco (USA) Inc. Supplemental Employee Retirement Plan (The
SERP), a non-contributory defined benefit plan. The SERP was last
evaluated by independent actuaries in 2005 who took into account
long-term estimates of inflation, mortality rates in determining the
obligation of AngloGold Ashanti USA under the SERP. This evaluation
of the SERP reflected plan liabilities of $1m, R6m (2004: $1m, R6m).
The SERP is an unfunded plan and is evaluated by actuaries on an
annual basis using the projected unit credit funding method.

Information with respect to the SERP is as follows:

Change in benefit obligation

Balance at beginning and end of year

(6)

Funded status at end of year

(1)

(6)

Net amount recognised

(1)

There is no net periodic pension and post-retirement cost during 2005
and 2004. The discount rate used to determine the benefit obligation
at 31 December was 5.5% (2004: 6.0%).

No contributions are made to this fund since the fund is closed to new
members and the current members are all retired.

Estimated future benefit payments
The pension benefit payments, which reflect the expected future
service, as appropriate, are expected to be paid after 2010 and
amount to $1m, R6m.

Nuclear Fuels South Africa (NUFCOR) – Retiree Medical Plan
The Nufcor South Africa Retiree Medical Plan (Mascom) is a defined
benefit plan in respect of certain past qualifying employees. The
accumulated post-employment medical aid obligation was determined
by independent actuaries in September 2005 using the projected unit
credit funding method. Movements that could impact the valuation
between the interim date and the date of the balance sheet have been
considered. The plan is fully funded.

2003

2005

Figures in million

2005

2003

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

192

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

33 Provision for pension and post-retirement

benefits (continued)

Information with respect to the Nufcor South Africa Retiree

Medical Plan is as follows:

Change in benefit obligation

Balance at beginning of year

–

(1)

Benefit paid

–

Actuarial loss

–

Balance at end of year

–

Change in plan assets

Fair value of plan assets at beginning of year

–

Expected return on plan assets

–

Employee contributions

–

(1)

Benefits paid

–

Fair value of plan assets at end of year

–

Funded status at end of year

–

Net amount recognised

–

Components of net periodic benefit cost

–

(1)

Expected return on plan assets

–

Assumptions

Assumptions used at year end are as follows:

Discount rate

7.75%

11.00%

Expected increase in health care costs

5.75%

9.00%

Expected return on plan assets

7.75%

11.00%

Assumed health care cost trend rates at 31 December:

Health care cost trend assumed for next year

5.75%

9.00%

Rate to which the cost trend is assumed to decline (the ultimate trend rate)

5.75%

9.00%

Year that the rate reaches the ultimate trend

N/A

Assumed health care cost trend rates have a significant effect on the

1% point

amounts reported for health care plans. A 1% point change in assumed

1% point

increase

health care cost trend rates would have the following effect:

increase

–

Effect on total service and interest cost

–

Effect on post-retirement benefit obligation

–

1% point

decrease

–

Effect on total service and interest cost

–

Effect on post-retirement benefit obligation

–

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

193

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

33 Provision for pension and post-retirement

benefits (continued)

Cash flows
Contributions
No contributions are made to this fund since the fund is closed to new
members and the current members are all retired.

Estimated future benefit payments
The medical benefit payments, which reflect the expected future
service, as appropriate, are expected to be paid after 2010
and amount to $nil, R2m.

Plan assets
The weighted-average asset allocation of the Nufcor South Africa
post-retirement medical fund as at the end of the year, by asset
category, is as follows:

Asset category

Unit trust investment funds

100%

Defined Contribution Funds

Contributions to the various retirement schemes are fully expensed during the year in which they are funded and the cost of contributing to

retirement benefits for the year amounted to $31m, R199m (2004: $40m, R254m).

Australia

The region contributes to the Australian Retirement Fund for the provision of benefits to employees and their dependants on retirement,

disability or death. The fund is a multi-industry national fund with defined contribution arrangements. Contribution rates by the operation on

behalf of employees varies, with minimum contributions, meeting compliance requirements under the Superannuation Guarantee legislation.

Members also have the option of contributing to approved personal superannuation funds. The contributions by the operation are legally

enforceable to the extent required by the Superannuation Guarantee legislation and relevant employment agreements.

Namibia (Navachab)

Navachab employees are members of a defined contribution provident fund. The fund is administered by the Old Mutual insurance company.

Both the company and the employees make contributions to this fund. AngloGold Ashanti seconded employees at Navachab remain

members of the applicable pension or retirement fund in terms of their conditions of employment with AngloGold Ashanti. The cost to the

group of all these contributions amounted to $1m, R6m (2004: $1m, R6m) during the year.

Mali (Sadiola, Yatela and Morila)

The Malian operations do not have retirement schemes for employees. All employees (local and expatriate) contribute towards the Government

social security fund, and the company also makes a contribution towards this fund. On retirement, Malian employees are entitled to a

retirement benefit from the Malian government. Expatriate employees are reimbursed only their contributions to the social security fund.

AngloGold Ashanti seconded employees in Mali remain members of the applicable pension or retirement fund in terms of their conditions of

employment with AngloGold Ashanti. The cost to the group of all these contributions amounted to $2m, R12m (2004: $4m, R19m) during

the year.

Tanzania (Geita)

Geita does not have a retirement scheme for employees. Tanzanian nationals contribute to the National Social Security Fund (NSSF) or the

Parastatal Provident Fund (PPF), depending on the employee’s choice, and the company also makes a contribution on the employee’s behalf

to the same fund. On leaving the group, employees may withdraw their contribution from the fund. From July 2005, the company contributes

to a supplemental provident fund which has been opened with the Parastatal Provident Fund (PPF). The company makes no contribution

towards any retirement schemes for contracted expatriate employees that are members of a pension or provident fund. Contracted expatriate

employees who are not members of a pension or provident fund contribute to the National Social Security Fund (NSSF) and the company

also makes a contribution to the same fund on behalf of these employees. AngloGold Ashanti employees seconded in Tanzania remain

members of the applicable pension or retirement fund in terms of their conditions of employment with AngloGold Ashanti.

Provision for pension and post-retirement benefits (continued)

North America

AngloGold Ashanti USA sponsors a 401(k) savings plan whereby employees may contribute up to 17% of their salary, of which up to 5% is

matched at a rate of 150% by AngloGold Ashanti USA. AngloGold Ashanti USA's contributions were $2m, R13m (2004: $2m, R13m) during

the year ended 31 December 2005.

South America

The AngloGold Ashanti South America region operates a number of defined contribution arrangements for their employees. These

arrangements are funded by the operations (basic plan) and operations/employees (optional supplementary plan). In December 2001,

contributions commenced to a PGBL fund, a plan similar to the American 401 (k) type of plan. This plan is administered by Bradesco

Previdencia e Seguros (which assume the risk for any eventual actuarial liabilities).

In 2005, the local authorities approved the withdrawal of sponsorship to the previous portfolio administrator, Fundambras Sociedade de

Previdencia Privada. With this scheme, the actuarial risk was carried by the sponsors and AngloGold Ashanti mines in Brazil had to fund the

$10m, R61m in cash in order to have the process completed by 29 September 2005. From 1 October 2005, the PGBL fund is the only private

pension plan sponsored by the group and contributions amounted to $1m, R6m (2004: $1m; R6m) during the year.

Ghana and Guinea

AngloGold Ashanti mines in Ghana and Guinea contribute to provident plans for their employees which are defined contribution plans. The

funds are administered by Boards of Trustees and invest mainly in Ghana and Guinea governments' treasury instruments, fixed term deposits

and other projects. The cost of these contributions were $3m, R20m (2004: $2m, R12m) for the year ended 31 December 2005.

South Africa

South Africa contributes to various industry-based pension and provident retirement plans which covers substantially all employees and are

defined contribution plans. These plans are all funded and the assets of the schemes are held in administrated funds separately from the

group's assets. The cost of providing these benefits amounted to $19m, R122m (2004: $29m, R181m) during the year.

34 Deferred taxation

Deferred taxation

Deferred taxation relating to temporary differences is made up as follows:

Liabilities

9,088

9,424

Tangible assets

1,485

1,610

115

Inventories

445

189

Derivatives

160

312

Other

9,789

10,040

1,582

1,734

Assets

577

914

Provisions

144

102

358

1,099

Derivatives

173

1,042

841

Tax assets

132

184

159

112

Other

2,136

2,966

467

378

7,653

7,074

Net deferred taxation liability

1,115

1,356

Included in the balance sheet as follows:

–

279

Deferred tax asset

–

7,653

7,353

Deferred tax liabilities

1,159

1,356

7,653

7,074

Net deferred taxation liability

1,115

1,356

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

194

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

195

34 Deferred taxation (continued)

The movement on the deferred tax balance is as follows:

3,929

7,653

Balance at beginning of year

1,356

589

–

(1)

Fair value adjustments

–

(572)

(732)

Income statement charge (note 13)

(115)

(107)

291

(377)

Taxation on other comprehensive income (note 29)

(58)

(5)

(68)

Tax on actuarial loss (note 29)

(11)

(1)

4,927

–

Acquisition of subsidiaries (note 37)

–

728

(8)

–

Disposal of subsidiaries (note 37)

–

(1)

(909)

599

Translation

(57)

105

7,653

7,074

Balance at end of year

1,115

1,356

35 Trade, other payables and deferred income

Non-current

Deferred income

(note 40)

Current

1,175

1,374

Trade creditors

216

209

–

Interest payable

–

980

815

Accruals

128

174

Amounts due to related parties

Deferred income

335

321

Unearned premiums on normal sale exempted contracts

134

Other creditors

2,629

2,711

(note 40)

427

466

Current trade and other payables are non-interest bearing and are

normally settled within 60 days.

36 Cash generated from operations

745

(1,117)

(Loss) profit before taxation

(160)

Adjusted for:

267

Non-cash movements

1,055

1,744

Movement on non-hedge derivatives

262

181

2,423

3,203

Amortisation of tangible assets (notes 4, 10 and 17)

503

380

(144)

(153)

Deferred stripping

(24)

(21)

(318)

(155)

Interest receivable (note 3)

(25)

(49)

(80)

444

Operating special items

(12)

Finance costs and unwinding of decommissioning and restoration

563

690

obligations (note 8)

108

208

Amortisation of intangible assets (notes 18 and 19)

(160)

211

Fair value adjustment on option component of convertible bond

(27)

(776)

(714)

Movements in working capital

(108)

(84)

3,522

4,433

699

588

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

36 Cash generated from operations (continued)

Movements in working capital:

(1)

(1,086)

Increase in inventories

(123)

(56)

(46)

Decrease (increase) in trade and other receivables

(40)

(776)

418

(Decrease) increase in trade and other payables

(8)

(776)

(714)

(108)

(84)

37 Acquisitions and disposals of subsidiaries

Acquisitions and disposals can be summarised as follows:

17,603

–

Tangible assets

–

2,587

312

–

Intangible assets

–

526

–

Inventories

–

Other investments

–

302

–

Trade and other receivables

–

356

–

Cash and cash equivalents

–

(18)

–

Minority interests (note 30)

–

(3)

(1,333)

–

Borrowings

–

(195)

(415)

–

Provisions (notes 32 and 33)

–

(61)

(4,919)

–

Deferred taxation (note 34)

–

(727)

(1,612)

–

Trade and other payables

–

(233)

(25)

–

Taxation

–

(4)

10,805

–

Carrying value

–

1,591

–

Profit on disposal of subsidiary

–

10,805

–

Net purchase consideration

–

1,591

(9,297)

–

Non-cash settlement – shares

–

(1,366)

–

Deferred sale consideration

–

(356)

–

Cash and cash equivalents

–

(51)

(28)

–

Term deposits included in other investments

–

(5)

1,139

–

Net cash flow on (acquisition) disposal

–

171

(1,139)

–

Net cash flow on (acquisition) disposal can be summarised as follows:

–

(171)

(1,139)

–

Purchase of Ashanti Goldfields Company Limited

–

(171)

–

Deferred sale consideration of Freda-Rebecca

–

2004

2005

Figures in million

Notes

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

196

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

197

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

37 Acquisitions and disposals (continued)

Ashanti

Goldfields

Company

Limited

Acquisition comprises the following:

Limited

17,639

–

Tangible assets (note 17)

–

2,592

312

–

Intangible assets (note 18)

–

Other investments

–

546

–

Inventories

–

312

–

Trade and other receivables

–

356

–

Cash and cash equivalents

–

(18)

–

Minority interests (note 30)

–

(3)

(1,343)

–

Borrowings

–

(197)

(425)

–

Provisions (notes 32 and 33)

–

(62)

(4,927)

–

Deferred taxation (note 34)

–

(728)

(1,635)

–

Trade and other payables

–

(236)

(25)

–

Taxation

–

(4)

10,820

–

Carrying value

–

1,593

–

Goodwill

–

10,820

–

Purchase consideration

–

1,593

(9,297)

–

Non cash settlement – shares

–

(1,366)

(356)

–

Cash and cash equivalents

–

(51)

(28)

–

Term deposits included in other investments

–

(5)

1,139

–

Cash flow on acquisition

–

171

Freda-

Rebecca

Disposals comprise the following:

Rebecca

–

Tangible assets (note 17)

–

Inventories

–

Trade and other receivables

–

(10)

–

Borrowings

–

(2)

(10)

–

Provisions (note 32)

–

(1)

(8)

–

Deferred taxation (note 34)

–

(1)

(23)

–

Trade and other payables

–

(3)

–

Carrying value

–

Profit on disposal of subsidiary

–

Sale consideration

–

(15)

–

Deferred sale consideration

–

(2)

–

Cash flow on disposal

–

On 23 April 2004, the High Court of Ghana confirmed the scheme
of arrangement between Ashanti Goldfields Company Limited and its
shareholders pursuant to which AngloGold would acquire the entire
issued ordinary share capital of Ashanti. The confirmation of the High
Court was lodged with the Registrar of Companies in Ghana on Monday,
26 April 2004, and the acquisition of Ashanti and the name change to
AngloGold Ashanti Limited became effective on 26 April 2004.

On 10 September 2004, AngloGold Ashanti confirmed its agreement to
sell its entire interest in Ashanti Goldfields Zimbabwe Limited to Mwana
Africa Holdings (Pty) Limited for a deferred consideration of $2m, R15m.
The sole operating asset of Ashanti Goldfields Zimbabwe Limited is the
Freda-Rebecca Gold Mine.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

198

38 Related parties

Details of material transactions with those related parties not dealt with elsewhere in the financial statements are summarised below:

Purchases

Amounts Purchases

Amounts

by (from)

owed to (by)

by (from)

owed to (by)

related related related related

parties parties

Figures in million

2005

2004

US Dollars

Holding company Anglo American plc

–

Fellow subsidiaries of the Anglo American plc group
Anglo Coal – a division of Anglo Operations Limited

1 – 1

–

Boart Longyear Limited – mining services

(1)

5 –

Haggie Steel Wire Rope Operations

(2)

8 1 9

–

Mondi Limited – timber

16 2

Scaw Metals – a division of Anglo Operations Limited –
steel and engineering

6 1 5

The Tongaat-Hulett Group Limited

– – –

–

Joint ventures of AngloGold Ashanti Limited
BGM Management Company Pty Ltd

– – –

–

Geita Gold Mining Limited

– – –

–

Societé d’ Exploitation des Mines d’ Or de Sadiola S.A.

– –

–

Societé d’ Exploitation des Mines d’ Or de Yatela S.A.

– – 1

–

Societé des Mines de Morila S.A.

(2) – (1)

–

SA Rands

Holding company Anglo American plc

–

Fellow subsidiaries of the Anglo American plc group
Anglo Coal – a division of Anglo Operations Limited

Boart Longyear Limited – mining services

(1)

–

Haggie Steel Wire Rope Operations

(2)

–

Mondi Limited – timber

105

101

Scaw Metals – a division of Anglo Operations Limited –
steel and engineering

40 4

The Tongaat-Hulett Group Limited

–

Joint ventures of AngloGold Ashanti Limited
BGM Management Company Pty Ltd

1 – –

–

Geita Gold Mining Limited

– – (2)

–

Societé d’ Exploitation des Mines d’ Or de Sadiola S.A.

(3)

Societé d’ Exploitation des Mines d’ Or de Yatela S.A.

–

Societé des Mines de Morila S.A.

(10) – (7)

Amounts owed to related parties are unsecured non-interest bearing and normally settled within 60 days.

(1)

Anglo American plc sold their interest in Boart Longyear Limited with effect from 29 July 2005.

(2)

Haggie Steel Wire Rope Operation’s related party transactions, previously included in Scaw Metals – a division of Anglo Operations Limited. During the year, Haggie Steel Wire Rope Operations were unbundled and are now reported separately.

Directors and other key management personnel
Details relating to directors' emoluments and shareholdings in the company are disclosed in the remuneration and directors' reports. (Detailed
on pages 113 to 126)

Compensation to key management personnel totalled $13m, R79m (2004: $9m, R55m). This total comprised short-term employee benefits
of $11m, R69m (2004: $8m, R51m); post-employment benefits of $1m, R7m, (2004: $1m, R4m); and share-based payments of $1m, R3m
(2004: nil).

Shareholders
The principal shareholders of the company are detailed on page 118 and 265.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

199

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

39 Contractual commitments and contingencies

Operating leases

At 31 December 2005, the group was committed to making the

following payments in respect of operating leases for amongst others,

hire of plant and equipment and land and buildings.

Expiry within

347

209

– One year

147

163

– Between one and two years

223

127

– Between two and five years

– After five years

–

721

501

128

Finance leases

The group has finance leases for plant and equipment. These leases

have terms of renewal but no purchase options and escalation

clauses. Renewals are at the option of the specific entity that holds the

lease. Future minimum lease payments under finance lease contracts

together with the present value of the net minimum lease payments

are as follows:

Present

value of

Minimum

value of

payments payments

2005

SA Rands

US Dollars

Within one year

Within one year but not more than five years

More than five years

–

107

142

Total minimum lease payments

–

Less: amounts representing finance charges

–

107

Present value of minimum lease payments

Present

value of

Minimum

value of

payments payments

2004

SA Rands

US Dollars

Within one year

117

Within one year but not more than five years

More than five years

118

166

Total minimum lease payments

–

Less: amounts representing finance charges

–

118

Present value of minimum lease payments

39 Contractual commitments and contingencies

(continued)

Capital commitments

Acquisition of tangible assets

835

1,182

Contracted for

186

148

3,716

4,597

Not contracted for

725

658

4,551

5,779

Authorised by the directors

911

806

Allocated for:
Project expenditure

1,741

1,204

– within one year

190

308

833

671

– thereafter

106

148

2,574

1,875

296

456

Stay-in-business expenditure

818

3,628

– within one year

572

145

1,159

276

– thereafter

205

1,977

3,904

615

350

Share of underlying capital commitments of joint ventures

–

This expenditure will be financed from existing cash resources, cash
from operations and future borrowings.

Contingent liabilities

The South African Department of Water Affairs and Forestry issued a

new Directive on 1 November 2005 ordering the four mining groups,

Simmer and Jack Investments (Proprietary) Limited, Simmer and Jack

Mines Limited (collectively known as Simmers who purchased the

Buffelsfontein shafts from DRDGold Limited), Harmony Gold Mining

Company Limited, AngloGold Ashanti and Stilfontein Gold Mining

Company to share equally, the costs of pumping water at Stilfontein’s

Margaret Shaft. This follows an interdict application made by

AngloGold Ashanti in response to DRDGold Limited’s threat to cease

funding the pumping of water at the Margaret and Buffelsfontein

shafts, after placing Buffelsfontein, its subsidiary that operated the

North West operations, into liquidation on 22 March 2005. Simmers

have purchased the Buffelsfontein shafts from DRDGold Limited and

have assumed the environmental and water management liabilities

associated with the Buffelsfontein shafts.

The directive also orders the mining companies to submit an

agreement and a joint proposal towards the long term sustainable

management of water arising from the mining activities in the area. The

group believes that it is not liable to fund these pumping costs but

cannot make any assurances regarding the ultimate result until the

–

matter has been settled.

–

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

200

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

201

39 Contractual commitments and contingencies

(continued)

The group has identified a number of groundwater pollution sites at its

current operations in South Africa. The group has investigated a

number of different technologies and methodologies that could

possibly be used to remediate the pollution plumes. The viability of the

suggested remediation techniques in the local geological formation in

South Africa is however unknown. No sites have been remediated in

South Africa. Present research and development work is focused on

several pilot projects to find a solution that will in fact yield satisfactory

results in South African conditions. Subject to the technology being

developed as a remediation technique, no reliable estimate can be

–

made for the obligation.

–

Following the decision to discontinue operations at Ergo in 2005,

employees surplus to requirements have been terminated and

retrenchment packages settled. Ergo continues to retain various staff

members to complete the discontinuance and the attendant

environmental obligations which are expected to be completed by

2015. The retained employees may resign, be transferred within the

group, attain retirement age or be retrenched as their current position

is made redundant. The group is currently unable to determine the

–

effects, if any, of any potential retrenchment costs.

–

The group has undertaken to re-export certain gold artifacts,

temporarily imported into South Africa, for which custom and value

added tax was waived. The group will be required to pay if it fails to

comply with the re-export arrangements agreed with the South

African Revenue Service.

The group has provided surety in favour of the lender in respect of gold

loan facilities to wholly-owned subsidiaries of Oro Group (Proprietary)

Limited, an associate of the group. The group has a total maximum

liability, in terms of the suretyships of R100m. The suretyship

–

100

agreements have a termination notice period of 90 days.

–

Mineração Serra Grande S.A., the operator of the Crixas mine in

Brazil, has received assessments from the State of Goias tax

inspection related to payments of sales taxes on gold deliveries for

export. Serra Grande is owned by AngloGold Ashanti and Kinross

Gold Corporation in a 50:50 arrangement. AngloGold Ashanti

manages the operation and its attributable share of the assessment is

approximately $29m, R184m. Mineração Serra Grande S.A. believes

the assessments are in violation of federal legislation on sales taxes

and that there is a remote chance of success for the State of Goias.

–

The assessment has been appealed.

–

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

39 Contractual commitments and contingencies

(continued)

A group of employees of Mining and Building Contractors (MBC), the

Obuasi underground developer, are claiming to be employees of the

group. If successful there is the risk of some employees claiming rights

–

to share options.

–

Bayswater Construction and Mining Limited (BCM) has instituted court

proceedings against Ashanti Goldfields Bibiani Limited (AGB). This

matter concerns a contractual dispute. This matter is currently stayed on

technical grounds as litigation cannot commence until arbitration has

been concluded. A loss of $2m, R13m is considered likely and has

been raised as a provision. The amount disclosed under contingent

–

liabilities is over and above the provision.

–

BCM claims against AGB, $1m, R6m in relation to a wall slip which

BCM considered that they have the exclusive right under their contract

–

to repair, but which was awarded by AGB to a third party.

–

The group has a potential liability at Navachab in Namibia to pay the

outstanding capital cost of the water pipeline and electricity supply in

case of mine closure prior to 2019. Based on current life-of-mine

business plans, the group believes the likelihood of this potential

liability being realised to be more than remote but less than likely.

–

Sierra Club and Mineral Policy Center filed two lawsuits against Cripple

Creek & Victor Gold Mining Company, AngloGold Ashanti (Colorado)

Corp., AngloGold Ashanti North America Inc., and Golden Cycle Gold

Corporation alleging various past and ongoing violations of the federal

Clean Water Act at the Cresson Project near Victor, Colorado. The

defendants dispute that there have been or that there are ongoing

violations of the Clean Water Act, and have been vigorously defending

themselves. The trial is scheduled February 2006. Without conceding

any liability but in an attempt to resolve these matters without the

cost and expense of trial the parties have held settlement discussions

and the defendants have offered approximately $0.5m, R3m to

conduct on-the-ground activities and pay some of plaintiffs costs.

–

At this time, no settlement has been reached.

–

Pursuant to the assignment of equipment leases to Queenstake

Resources USA Inc., as a result of the sale of Jerritt Canyon effective

30 June 2003, AngloGold Ashanti USA has become secondarily liable

in the event of a default by Queenstake Resources USA Inc. in

performance of any of the lessee's obligations arising under the lease.

These agreements have an approximate term remaining of three years.

–

AngloGold Ashanti North America had a potential liability in respect of

preference claims from a third party. This was in respect of gold

shipments returned by the third party to AngloGold Ashanti North

America, which the bankruptcy trustee claimed should not have been

returned and final shipments that should not have been paid, as the

third party had filed for protection under Chapter 11 of the US

–

Bankruptcy Code. These claims were dismissed during 2005.

–

2004

2005

Figures in million

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

202

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

203

39 Contractual commitments and contingencies

(continued)

Guarantees

The following amounts have been guaranteed and have been

recognised on balance sheet:

AngloGold Offshore Investments Limited a wholly-owned subsidiary of

AngloGold Ashanti has given a guarantee of 50% of the Nufcor

International Limited loan facility with RMB International (Dublin)

–

Limited amounting to $25m, R159m.

–

AngloGold Ashanti Limited and its wholly-owned subsidiary AngloGold

Ashanti Holdings plc have issued hedging guarantees to several

counterparty banks in which they have guaranteed the due

performance by the Geita Management Company Limited (GMC) of its

obligations under or pursuant to the hedging agreements entered into

by GMC, and to the payment of all money owing or incurred by GMC

as and when due. The guarantee shall remain in force until no

sum remains to be paid under the hedging agreements and the Bank

has irrevocably recovered or received all sums payable to it under the

hedging agreements. The maximum potential amount of future

payments is all monies due, owing or incurred by GMC under or

pursuant to the hedging agreements. At 31 December 2005 the

marked-to-market valuation of the GMC hedge book was negative

$172m, R1,090m of which $122m, R771m was raised on the balance

–

sheet and the remainder treated under the NPNS exemption.

–

The group has guaranteed all payments and other obligations of

AngloGold Ashanti Holdings plc regarding the convertible bonds

issued during 2004 with a fiscal maturity date of 27 February 2009.

The bonds issued amounted to $1billion at 2.375%. The group’s

obligations regarding the guarantee will be direct, unconditional and

unsubordinated.

The group has issued gold delivery guarantees to several

counterparty banks in which it guarantees the due performance of its

wholly-owned subsidiaries AngloGold Ashanti USA Inc. and

AngloGold Ashanti South America under their respective gold

–

hedging agreements.

–

The group, together with its wholly-owned subsidiary, AngloGold

Ashanti Holdings plc, has provided guarantees to several counterparty

banks for the hedging commitments of its wholly owned subsidiary

Ashanti Treasury Services Limited (ATS). At 31 December 2005, the

marked-to-market valuation of the ATS hedge book was negative

$723m, R4,591m, of which $112m, R711m was raised on the balance

–

sheet while the remainder was treated under the NPNS exemption.

–

179

2004

2005

Figures in million

Notes

2005

2004

SA Rands

US Dollars

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

204

Financial risk management activities

In the normal course of its operations, the group is exposed to gold price, currency, interest rate, liquidity and credit risks. In order to manage
these risks, the group may enter into transactions which make use of both on- and off-balance sheet derivatives. The group does not acquire,
hold or issue derivatives for trading purposes. The group has developed a comprehensive risk management process to facilitate, control and
monitor these risks. The board has approved and monitors this risk management process, inclusive of documented treasury policies,
counterpart limits, controlling and reporting structures.

Controlling risk in the group

The Executive Committee and the Treasury Committee are responsible for risk management activities within the group. The Treasury
Committee, chaired by the independent chairman of the AngloGold Ashanti Audit and Corporate Governance Committee, comprising
executive members and treasury executives, reviews and recommends to the Executive Committee all treasury counterparts, limits,
instruments and hedge strategies. The treasurer is responsible for managing investment, gold price, currency, liquidity and credit risk. Within
the treasury function, there is an independent risk function, which monitors adherence to treasury risk management policy and counterpart
limits and provides regular and detailed management reports.

The financial risk management objectives of the group are defined as follows:

•

Safeguarding the group core earnings stream from its major assets through the effective control and management of gold price risk, foreign
exchange risk and interest rate risk;

•

Effective and efficient usage of credit facilities in both the short and long term through the adoption of reliable liquidity management planning
and procedures;

•

Ensuring that investment and hedging transactions are undertaken with creditworthy counterparts;

•

Ensuring that all contracts and agreements related to risk management activities are coordinated, consistent throughout the group and
comply where necessary with all relevant regulatory and statutory requirements.

Gold price and currency risk and cash flow hedging

Gold price risk arises from the risk of an adverse effect on current or future earnings resulting from fluctuations in the price of gold. The gold
market is predominately priced in US dollars which exposes the group to the risk that fluctuations in the SA rand/US dollar, Brazilian
real/US dollar, Argentinian peso/US dollar and Australian dollar/US dollar exchange rates may also have on current or future earnings.

A number of products, including derivatives, are used to manage well-defined gold price and foreign exchange risks that arise out of the
group's core business activities. Forward-sales contracts and call and put options are used by the group to protect itself from downward
fluctuations in the gold price. These derivatives may establish a minimum price for a portion of future production while the group maintains
the ability, to benefit from increases in the spot gold price for the majority of future gold production. At year end, hedge cover was at 35% of
five years production.

Some of the instruments described above are designated and accounted for as cash flow hedges. The hedge forecast transactions are
expected to occur over the next 10 years, in line with the maturity dates of the hedging instruments and will affect profit and loss simultaneously
in an equal and opposite way. The fair value of all instruments so designated at the balance sheet date is a negative $338m, R2,142m.

Net delta open hedge position as at 31 December 2005

The group had the following net forward-pricing commitments outstanding against future production.

Summary: All open contracts in the group's commodity hedge position as at 31 December 2005

Year

2006

2007

2008

2009

2010

2011-2015

Total

US Dollar/Gold

Forward contracts
Amount (kg)

8,592

25,469

30,076

26,288

16,328

37,239

143,992

$/oz

$279

$357

$365

$380

$382

$411

$375

Put options purchased
Amount (kg)

8,592

1,455

10,047

$/oz

$345

$292

$337

Put options sold
Amount

(kg)

6,532

855

1,882 1,882 7,527

18,678

$/oz

$389

$390

$400 $410 $435 $411

Call options purchased
Amount (kg)

12,144

6,357

18,501

$/oz

$346

$344

$345

Call options sold
Amount (kg)

32,157

32,544

32,500

31,194

28,054

72,911

229,360

$/oz

$386

$387 $393 $418 $429 $497 $432

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

205

Financial risk management activities (continued)

Summary: All open contracts in the group's commodity hedge position as at 31 December 2005

Year

2006

2007

2008

2009

2010

2011-2015

Total

Rand/Gold

Forward contracts

Amount (kg)

2,449

933

3,382

R/kg

R97,520

R116,335

R102,711

Put options purchased

Amount (kg)

1,875

R/kg

R93,602

Put options sold

Amount (kg)

2,333

R/kg

R93,713

Call options sold

Amount (kg)

3,306

311

2,986

12,575

R/kg

R102,447

R108,123

R202,054

R216,522

R230,990

R183,851

Australian Dollar/Gold

Forward contracts
Amount (kg)

(3,110)

(1)

6,843

2,177

3,390

3,110

12,410

A$/oz

A$625

A$640

A$665

A$656

A$684

A$664

Call options purchased
Amount (kg)

3,110

3,732

3,110

1,244

3,110

14,306

A$/oz

A$673

A$668

A$680

A$694

A$712

A$684

Total net gold
Delta (kg)

(2)

23,848

56,229

59,740

57,703

42,074

97,482

337,076

Delta (oz)

(2)

766,730

1,807,802

1,920,683

1,855,192

1,352,709

3,134,115

10,837,231

(1)

Indicates a long position resulting from forward purchase contracts. The group enters into forward purchase contracts as part of its strategy to actively manage and reduce the size of the hedge book.

(2)

The Delta of the hedge position indicated above, is the equivalent gold position that would have the same marked-to-market sensitivity for a small change in the gold price. This is calculated using the Black-Scholes option formula with the ruling market prices, interest rates and volatilities as at 31 December 2005.

US Dollar/Silver

Put options purchased
Amount (kg)

43,545

130,635

$/oz

$7.11

$7.40

$7.66

$7.39

Put options sold
Amount (kg)

43,545

130,635

$/oz

$6.02

$5.93

$6.19

$6.05

Call options sold
Amount (kg)

43,545

130,635

$/oz

$8.11

$8.40

$8.64

$8.38

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

206

Financial risk management activities (continued)

Summary: All open contracts in the group’s currency hedge position as at 31 December 2005

Year 2006

2007

2008

2009

2010

2011-2015

Total

Rand/US Dollar (000)

Put options purchased
Amount ($)

60,000

R per $

R6.89

Put options sold
Amount ($)

60,000

R per $

R6.56

Call options sold
Amount ($)

60,000

R per $

R7.28

Australian Dollar (000)

Forward contracts
Amount ($)

59,149

$ per A$

$0.75

Put options purchased
Amount ($)

80,000

$ per A$

$0.73

Put options sold
Amount ($)

80,000

$ per A$

$0.76

Call options sold
Amount ($)

130,000

$ per A$

$0.72

Brazilian Real/US Dollar (000)

Forward contracts
Amount ($)

24,000

4,000

28,000

BRL per $

BRL3.18

BRL3.31

BRL3.20

Call options sold
Amount ($)

20,000

BRL per $

BRL3.29

The mix of hedging instruments, the volume of production hedged and the tenor of the hedging book is continually reviewed in the light of

changes in operational forecasts, market conditions and the group's hedging policy.

Forward sales contracts require the future delivery of gold at a specified price.

A put option gives the put buyer the right, but not the obligation, to sell gold to the put seller at a predetermined price on a predetermined date.

A call option gives the call buyer the right, but not the obligation, to buy gold from the call seller at a predetermined price on a

predetermined date.

The marked-to-market value of all derivatives, irrespective of accounting designation, making up the hedge position was negative $1.94bn

(negative R12.32bn) as at 31 December 2005 (as at 31 December 2004: negative $1.16bn, negative R6.58bn). These values were based on

a gold price of $517.00/oz, exchange rates of $1 = R6.305 and A$1 = $0.7342 and the prevailing market interest rates and volatilities at 31

December 2005.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

207

Financial risk management activities (continued)

Interest rate and liquidity risk

Fluctuations in interest rates impact on the value of short-term cash investments and financing activities, giving rise to interest rate risk.

In the ordinary course of business, the group receives cash from the proceeds of its gold sales and is required to fund working capital
requirements. This cash is managed to ensure surplus funds are invested in a manner to achieve market-related returns while minimising risks.
The group is able to actively source financing at competitive rates.

The syndicated $600m facility was repaid on 4 February 2005, and a new three year $700m syndicated facility was signed in January 2005,
with an interest rate of LIBOR plus 0.4% per annum.

The group has sufficient undrawn borrowing facilities available to fund working capital requirements.

Cash and short-term loans advanced

Fixed rate

Floating rate

investment

Effective

investment

Effective

amount

rate

amount rate

Maturity date

Currency

million

All less than one year

USD

3.8

3.6

ZAR

6.0

5.9

AUD

5.4

6.0

EUR

3.8

2.5

HKD

1.8

BRL

19.0

ARS

5.1

NAD

7.5

Borrowing maturity profile (note 31)

Between

Within one year

one and two years

two and five years

Borrowings

Effective

Borrowings

Effective

Borrowings

Effective

amount

rate

amount

rate

amount

rate

Currency

million

5.0

5.3

1,383

3.3

ZAR

894

(1)

7.4

1,989

10.5

Interest-rate risk

Fixed for less

Fixed for between

Fixed for greater

than one year

one and three years

than three years

Total

Borrowings

Effective

Borrowings

Effective

Borrowings

Effective

borrowings

amount

rate

amount

rate

amount

rate amount

Currency

million

501

5.3

917

2.4

1,440

ZAR

894

(1)

7.4

1,989

10.5

2,883

(1)

Includes R73m interest accrual on the corporate bond as at 31 December 2005.

Interest on financial instruments classified as floating rate is repriced at intervals of less than one year. Interest on financial instruments classified
as fixed rate is fixed until the maturity of the instrument. The other financial instruments of the group that are not included in the tables above
are non-interest bearing and are therefore not subject to interest rate risk.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

208

Financial risk management activities (continued)

Interest rate swaps

The group previously entered into a convertible interest rate swap. The swap was a derivative instrument as defined by IAS39 and had been
designated as a fair value hedge. The swap hedged the group’s exposure to fair value changes on the $1 billion convertible bonds attributable to
changes in interest rates and had the effect of swapping the 2.375% fixed coupon into a LIBOR-based floating rate. As the swap was considered
an integral part of the bond, the interest expense on the convertible bonds, for the portion of the year that the swap was in place, is disclosed
after adjusting such expense for the interest income and expense under the swap.

The swap was unwound during September 2005. Since then the carrying value of the bond was no longer adjusted for changes in fair value

attributable to the hedged interest rate risk. At that point the amortisation profile was recalculated to a new effective interest rate that will result in

the bond being amortised up to redemption value by maturity.

The group had vanilla interest rate swap agreements to convert R750m of its R2,000m fixed-rate corporate bond to variable-rate debt. These

interest rate swaps ran over the term of the bond and received interest at a fixed rate of 10.5% and paid floating JIBAR (reset quarterly) plus a

spread of 0.915%.

These swaps were unwound during April 2005. All changes in the fair value of the swaps up to that point are recorded in the income statement

as the swaps were not designated as a hedge.

Credit risk

Credit risk arises from the risk that a counterpart may default or not meet its obligations timeously. The group minimises credit risk by ensuring

that credit risk is spread over a number of counterparts. These counterparts are financial and banking institutions of good credit quality. Where

possible, management tries to ensure that netting agreements are in place. The combined maximum credit risk exposure at the balance sheet

date is $713m, R4,523m on a contract by contract basis. Credit risk exposure netted by counter parties amounts to $18m, R115m. No set-off

is applied to the balance sheet due to the different maturity profiles of assets and liabilities.

Trade debtors mainly comprise banking institutions purchasing gold bullion. Normal market settlement terms are two working days. No impairment

was recognised as the principal debtors continue to be in a sound financial position.

The group does not generally obtain collateral or other security to support financial instruments subject to credit risk, but monitors the credit

standing of counterparts.

Fair value of financial instruments

The estimated fair values of financial instruments are determined at discrete points in time based on relevant market information. These

estimates involve uncertainties and cannot be determined with precision. The estimated fair values of the group's financial instruments as

at 31 December 2005 are as follows:

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

209

Financial risk management activities (continued)

Type of instrument

2005

2004

Carrying

Fair

Carrying

Fair

Figures in million

amount

value

Amount

Value

US Dollars

Financial assets
Other investments (note 20)

102

107

Other non-current assets (note 23)

Trade and other receivables (note 24)

109

143

Cash restricted for use (note 25)

Cash and cash equivalents (note 26)

209

289

Financial liabilities
Borrowings (note 31)

1,894

1,915

1,605

1,623

Trade, other payables and deferred income (note 35)

370

405

Derivatives comprise the following:

(749)

(2,029)

(393)

(1,217)

Forward sale commodity contracts

(81)

(909)

(172)

(666)

Option contracts

(612)

(1,058)

(177)

(507)

Foreign exchange contracts

Foreign exchange option contracts

(5)

(2)

Interest rate swaps

(2)

Option component of convertible bond

(88)

(56)

SA Rands

Financial assets
Other investments (note 20)

645

608

Other non-current assets (note 23)

Trade and other receivables (note 24)

688

805

Cash restricted for use (note 25)

148

Cash and cash equivalents (note 26)

1,328

1,630

Financial liabilities
Borrowings (note 31)

12,015

12,147

9,062

9,523

Trade, other payables and deferred income (note 35)

2,354

2,283

Derivatives comprise the following:

(4,751)

(12,873)

(2,218)

(6,900)

Forward sale commodity contracts

(517)

(5,768)

(972)

(3,787)

Option contracts

(3,883)

(6,713)

(998)

(2,865)

Foreign exchange contracts

Foreign exchange option contracts

(33)

(10)

Interest rate swaps

197

156

(11)

Option component of convertible bond

(556)

(317)

The fair value amounts include off balance sheet normal sale exempted contracts, which are not carried on the balance sheet and excluded
from the carrying amount. All other derivatives are carried at fair value.

The amounts in the tables above do not necessarily agree with the totals in the notes referenced as only financial assets and liabilities are shown.

2005

Normal

Cash flow

Non-

sale

hedge

Figures in million

exempted

accounted

Total

US Dollars

Derivatives comprise the following:

(1,280)

(338)

(411)

(2,029)

Forward sale commodity contracts

(828)

(342)

261

(909)

Options contracts

(446)

(4)

(608)

(1,058)

Foreign exchange contracts

–

(2)

Foreign exchange option contracts

–

(5)

Interest rate swaps

(6)

–

Option component of convertible bond

–

(88)

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

210

Financial risk management activities (continued)

Type of instrument (continued)

2004

Normal

Cash flow

Non-

sale

hedge

Figures in million

exempted

accounted

Total

US Dollars

Derivatives comprise the following:

(824)

(238)

(155)

(1,217)

Forward sale commodity contracts

(494)

(252)

(666)

Options contracts

(330)

(1)

(176)

(507)

Foreign exchange contracts

–

Foreign exchange option contracts

–

(2)

Interest rate swaps

–

(2)

Option component of convertible bond

–

(56)

2005

Normal

Cash flow

Non-

sale

hedge

Figures in million

exempted

accounted

Total

SA Rands

Derivatives comprise the following:

(8,122)

(2,142)

(2,609)

(12,873)

Forward sale commodity contracts

(5,251)

(2,170)

1,653

(5,768)

Options contracts

(2,830)

(22)

(3,861)

(6,713)

Foreign exchange contracts

–

(9)

Foreign exchange option contracts

–

(33)

Interest rate swaps

(41)

–

197

156

Option component of convertible bond

–

(556)

2004

Normal

Cash flow

Non-

sale

hedge

Figures in million

exempted

accounted

Total

SA Rands

Derivatives comprise the following:

(4,682)

(1,342)

(876)

(6,900)

Forward sale commodity contracts

(2,815)

(1,420)

448

(3,787)

Options contracts

(1,867)

(7)

(991)

(2,865)

Foreign exchange contracts

–

Foreign exchange option contracts

–

(10)

Interest rate swaps

–

(11)

Option component of convertible bond

–

(317)

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December 2005

211

Financial risk management activities (continued)

Derivative maturity profile

2005

Figures in million

Total

Assets

Liabilities

US Dollars

Total

(749)

713

(1,462)

Less: Amounts to mature within 12 months of balance sheet date

399

(675)

1,074

Amounts to mature between one and two years

117

(30)

147

Amounts to mature between two and five years

233

(8)

241

Amounts to mature thereafter

–

SA Rands

Total

(4,751)

4,523

(9,274)

Less: Amounts to mature within 12 months of balance sheet date

2,534

(4,280)

6,814

Amounts to mature between one and two years

745

(188)

933

Amounts to mature between two and five years

1,472

(55)

1,527

Amounts to mature thereafter

–

2004

Figures in million

Total

Assets

Liabilities

US Dollars

Total

(393)

677

(1,070)

Less: Amounts to mature within 12 months of balance sheet date

(490)

533

Amounts to mature between one and two years

246

(128)

374

Amounts to mature between two and five years

(59)

156

Amounts to mature thereafter

(7)

–

(7)

SA Rands

Total

(2,218)

3,822

(6,040)

Less: Amounts to mature within 12 months of balance sheet date

240

(2,767)

3,007

Amounts to mature between one and two years

1,389

(725)

2,114

Amounts to mature between two and five years

552

(330)

882

Amounts to mature thereafter

(37)

–

(37)

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Trade and other receivables, cash restricted for use, cash and cash equivalents and trade and other payables

The carrying amounts approximate fair value because of the short-term duration of these instruments.

Investments and other non-current assets

Listed investments are carried at fair value while unlisted investments are carried at amortised cost. The fair value of unlisted investments and

other non-current assets has been calculated using market interest rates.

Borrowings

The fair values of listed fixed rate debt and the convertible bonds are shown at their closing market value. The remainder of debt re-prices on

a short-term floating rate basis, and accordingly the carrying amount is considered to approximate fair value.

Derivatives

The fair values of derivatives are estimated based on the ruling market prices, volatilities and interest rates as at 31 December 2005.

The group uses the Black-Scholes option pricing formula to value option contracts. One of the inputs into the model is the level of volatility.

These volatility levels are themselves not exchange traded and are not observable generally in the market. The group uses volatility input

supplied by leading market participants (international banks). The group believes that no other possible alternative would result in significantly

different fair value estimations.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

212

Changes to comparative information

Change in

accounting policies

Reclassifications

Equity Change

Fair

portion

Ergo

Balance

value

of the

accounting

treated

per

adjustment

convertible

treatment

as a

annual

on option

bond

for

dis-

Revised

financial component

reallocated

actuarial

Other

continued

2004

statements

of to

deriva-

gains

and

reclassifi-

opera-

com-

US Dollar million

2004

bond

(1)

tives

(1)

losses

cations

tion

(2)

Rounding

parative

Income statement
Revenue

(3)

2,521 – – – 5

(92)

–

2,434

Gold

income

2,396 – – – –

(87)

–

2,309

Cost

sales

(2,022)

– – – –

98 –

(1,924)

Non-hedge derivative loss

(4)

– – – –

(142)

– –

(142)

Gross profit

(4)

374 – – –

(142)

11 –

243

Corporate administration and
other

expenses

(51)

– – – – – –

(51)

Market

development

costs

(15)

– – – – – –

(15)

Exploration

costs

(44)

– – – – – –

(44)

Amortisation

intangible

assets

(31)

– – – – – –

(31)

Impairment of tangible assets

(5)

(1)

– – – 1 – –

–

Non-hedge derivative loss

(4)

(142)

– – –

142 – –

–

Other net operating expenses

(6)

(12)

– – – 1

– (1)

(12)

Other operating income

(6)

1 – – – (1)

– –

–

Operating special items

(5) (8)

–

– – –

– –

Operating profit

79 – – –

11 (1)

102

Interest received

(3)

44 – – – 5 – –

Other net income

(3) (7)

9 – – – (9)

– –

–

Exchange gain

(7)

– – – – 4 – –

Profit on disposal of assets and subsidiaries

(8)

13 – – –

(13) – –

–

Fair value adjustment on option
component

convertible

bond

–

27 – – – – –

Finance costs and unwinding of
decommissioning

obligations

(87)

– – – – – –

(87)

Fair value gains on interest rate
swaps

2 – – – – – –

Share of associates profit

(9)

– – – – – – –

–

Profit before taxation

27 – – –

11 (1)

Taxation

40 – – – – – 1

Profit after taxation from
continuing operations

100

27 – – –

11 –

138

Discontinued operations
Loss for the year for
discontinued

operations

– – – – –

(11)

–

(11)

Profit for the year

100

27 – – – – –

127

Allocated as follows
Equity

shareholders

the

parent

27 – – – – –

108

Minority

interests

19 – – – – – –

100

27 – – – – –

127

(1)

The convertible bonds were previously accounted for as compound financial instruments, part equity and part liability. The equity component was not
remeasured for changes in fair value. Convertible bonds are now accounted for entirely as a liability, with the option component disclosed as a derivative
liability, carried at fair value. Changes in such fair value are recorded in the income statement.

(2)

Ergo reclassified as a discontinued operation from 1 February 2005 as it has reached the end of its useful life.

(3)

Growth in AngloGold Environmental Rehabilitation Trust Fund reclassified to be included in interest received. Interest received is included in revenue.

(4)

Non-hedge derivative loss reclassified to be included in gross profit.

(5)

Impairment of tangible assets reclassified to operating special items.

(6)

Other operating income reclassified to other net operating expenses.

(7)

Exchange gain reclassified to be reported separately on the face of the income statement.

(8)

Profit on disposal of assets and subsidiaries reclassified to operating special items.

(9)

Share of associates profit reclassified from other net income to comply with IAS 28.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

213

Changes to comparative information (continued)

Change in

accounting policies

Reclassifications

Equity Change

Fair

portion

Ergo

Balance

value

of the

accounting

treated

per

adjustment

convertible

treatment

as a

annual

on option

bond

for

dis-

Revised

financial component

reallocated

actuarial Other

continued

2004

statements

of to

deriva-

gains

and

reclassifi-

opera-

com-

SA Rands million

2004

bond

(1)

tives

(1)

losses cations

tion

(2)

Rounding

parative

Income statement
Revenue

(3)

16,150 – – –

(591)

–

15,592

Gold

income

15,348 – – – –

(560)

–

14,788

Cost

sales

(12,933)

– – – –

628 –

(12,305)

Non-hedge derivative loss

(4)

– – – –

(786)

– –

(786)

Gross profit

(4)

2,415 – – –

(786)

68 –

697

Corporate administration and
other expenses

(331)

– – – – – –

(331)

Market

development

costs

(100)

– – – – – –

(100)

Exploration

costs

(283)

– – – – – –

(283)

Amortisation

intangible

assets

(200)

– – – – – –

(200)

Impairment of tangible assets

(5)

(8)

– – – 8 – –

–

Non-hedge derivative loss

(4)

(786)

– – –

786 – –

–

Other net operating expenses

(6)

(78)

– – – 9 – –

(69)

Other operating income

(6)

9 – – – (9) – –

–

Operating special items

(5) (8)

– – – –

80 – –

Operating profit

638 – – –

68 –

794

Interest received

(3)

285 – – –

33 – –

318

Other net income

(3) (7)

59 – – –

(59)

– –

–

Exchange gain

(7)

– – – –

25 – –

Profit on disposal of assets and subsidiaries

(8)

88 – – –

(88) – –

–

Fair value adjustment on option
component

convertible

bond

–

160 – – – – –

160

Finance costs and unwinding of
decommissioning

obligations

(563)

– – – – – –

(563)

Fair value gains on interest rate
swaps

10 – – – – – –

Share of associates profit

(9)

– – – – 1 – –

Profit before taxation

517

160 – – –

68 –

745

Taxation

174 – – – – 5 –

179

Profit after taxation from
continuing operations

691

160 – – –

73 –

924

Discontinued operations
Loss for the year from
discontinued

operations

– – – – –

(73)

–

(73)

Profit for the year

691

160 – – – – –

851

Allocated as follows
Equity

shareholders

parent

567

160 – – – – 1

728

Minority

interests

124 – – – – – (1)

123

691

160 – – – – –

851

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

214

Changes to comparative information (continued)

Change in

Restate-

accounting policies

Reclassifications

ment

Equity Change

Fair

portion

Ergo

Balance

value

of the accounting

treated

per adjustment convertible

treatment

as a

annual

on option

bond

for

dis-

Tax

Revised

financial component reallocated

actuarial

Other

continued

rate

2004

statements

of to

deriva-

gains and

reclassifi-

opera-

conces-

com-

US Dollar million

2004

bond

(1)

tives

(1)

losses

(2)

cations

tion

sion

(3)

Rounding

parative

Balance sheet

Assets

Non-current assets

Tangible assets

(4)

5,880 – – – 8 – –

–

5,888

Intangible

assets

416 – – – – –

(1)

435

Investments

associates

8 – – – – – –

–

Other investments

(4) (5)

40 – – –

67 – –

–

107

Inventories

(6)

22 – – –

13 – –

–

Derivatives

187 – – – – – –

–

187

Trade and other receivables

(7)

– – – –

10 – –

–

Other non-current assets

(5) (8)

106 – –

(20)

(68)

– –

–

6,659 – –

(20)

30 –

(1)

6,688

Current assets

Inventories

(6)

419 – – –

(13) – –

–

406

Trade and other receivables

(7)

309 – – – (8) – –

302

Derivatives

490 – – – – – –

–

490

Current

portion

other

non-current

assets

1 – – – – – –

–

Cash restricted for use

(5) (9)

– – – –

26 – –

–

Cash and other cash equivalents

(9)

312 – – –

(23)

– –

–

289

1,531 – - –

(18) – –

1,514

Total assets

8,190 – –

(20)

12 –

–

8,202

EQUITY AND LIABILITIES

capital

and

premium

3,364 – – – – – –

–

3,364

Retained earnings and other reserves

(135)

(82)

(22)

–

(213)

Shareholders' equity

3,229

(82)

(22)

–

3,151

Minority

interests

58 – – – – – –

–

Total

equity

3,287

(82)

(22) – – –

3,209

Non-current liabilities

Borrowings

1,286 – – – – – –

–

1,286

Environmental rehabilitation and

other provisions

(10)

231 – – – (1) – –

–

230

Provision for pension and post-

retirement benefits

(8) (10)

171 – –

13 – –

–

197

Trade, other payables and deferred

income

(11)

–

Derivatives

481

(25)

82 – – – –

(1)

537

Deferred

taxation

1,347 – –

(11) – –

–

1,356

3,516 (25)

– 2 16 – 20

(1)

3,610

Current liabilities

Trade, other payables and deferred

income

(11)

470 – – – (4) – –

–

466

Current

portion

borrowings

319 – – – – – –

–

319

Derivatives

533 – – – – – –

–

533

Taxation

65 – – – – – –

–

1,387 – – – (4) – –

–

1,383

Total

liabilities

4,903 (25)

82 2 12 – 20

(1)

4,993

Total equity and liabilities

8,190 – –

(20)

12 –

–

8,202

(1)

(2)

The AngloGold Ashanti group has adopted IAS 19 (revised) whereby actuarial gains and losses are recognised through equity reserves.

(3)

Restatement of deferred tax asset being tax rate concession in Ghana, to intangible assets in terms of IAS 38.

(4)

Investment properties included in other investments, reclassified to tangible assets.

(5)

Fixed-term deposits held by the AngloGold Environmental Rehabilitation Trust Fund and Environmental Protection Bond reclassified to other investments
and restricted cash from other non-current assets.

(6)

Reclassification of inventories from current to non-current assets.

(7)

Reclassification of trade and other receivables from current to non-current assets.

(8)

Reclassification of AngloGold Ashanti Pension Fund credit balance from other non-current assets to provisions for pension and post-retirement benefits.

(9)

Reclassification from cash and cash equivalents to cash restricted for use.

(10)

Reclassification of North America Pension Plan from other provisions to retirement provisions.

(11)

Reclassification of deferred income from current to non-current trade and other payables.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

215

Changes to comparative information (continued)

Change in

Restate-

accounting policies

Reclassifications

ment

Equity Change

Fair

portion

Ergo

Balance

value

of the accounting

treated

per adjustment convertible

treatment

as a

annual

on option

bond

for

dis-

Tax

Revised

financial component reallocated

actuarial

Other

continued

rate

2004

statements

of to

deriva-

gains

and

reclassifi-

opera-

conces-

com-

SA Rand million

2004

bond

(1)

tives

(1)

losses

(2)

cations

tion

sion

(3)

Rounding

parative

Balance sheet
ASSETS
Non-current assets
Tangible assets

(4)

33,195 – – –

44 – –

–

33,239

Intangible

assets

2,347 – – – – –

111

–

2,458

Investments in associates

43 – – – – – –

–

Other investments

(4) (5)

223 – – –

385 – –

–

608

Inventories

(6)

124 – – –

78 – –

–

202

Derivatives

1,055 – – – – – –

–

1,055

Trade and other receivables

(7)

– – – –

55 – –

–

Other non-current assets

(5) (8)

601 – –

(113)

(387)

– –

–

101

37,588 – –

(113)

175 –

111

–

37,761

Current assets
Inventories

(6)

2,363 – – –

(78) – –

–

2,285

Trade and other receivables

(7)

1,747 – – –

(48) – –

1,700

Derivatives

2,767 – – – – – –

–

2,767

Current

portion

other non-current assets

5 – – – – – –

–

Cash restricted for use

(5) (9)

– – – –

148 – –

–

148

Cash and cash equivalents

(9)

1,758 – – –

(128)

– –

–

1,630

8,640 – – –

(106) – –

8,535

Total assets

46,228 – –

(113)

69 –

111

46,296

EQUITY AND LIABILITIES
Share capital and premium

18,987 – – – – – –

–

18,987

Retained earnings and other reserves

(759)

147

(463)

(122)

–

(1,197)

Shareholders' equity

18,228

147

(463)

(122)

–

17,790

Minority

interests

327 – – – – – –

–

327

Total

equity

18,555

147

(463)

(122)

– – –

–

18,117

Non-current liabilities
Borrowings

7,262 – – – – – –

–

7,262

Environmental rehabilitation and other
provisions

(10)

1,297 – – 3 (6) – –

–

1,294

Provision for pension and post-retirement
benefits

(8) (10)

968 – –

75 – –

–

1,112

Trade, other payables and deferred
income

(11)

–

Derivatives

2,716

(147)

463 – – – –

3,033

Deferred

taxation

7,605 – –

(63)

– –

111

–

7,653

19,848 (147)

463

9 90

– 111

20,375

Current liabilities
Trade, other payables and deferred
income

(11)

2,650 – – –

(21) –

–

2,629

Current portion of borrowings

1,800 – – – – – –

–

1,800

Derivatives

3,007 – – – – – –

–

3,007

Taxation

368 – – – – – –

–

368

7,825 – – –

(21) – –

–

7,804

Total liabilities

27,673

(147)

463

–

111

28,179

Total equity and liabilities

46,228 – –

(113)

69 –

111

46,296

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

216

Changes to comparative information (continued)

Change in

accounting policies

Reclassifications

Equity Change

Fair

portion

Ergo

Balance

value

of the

accounting

treated

per

adjustment

convertible

treatment

as a

annual

on option

bond

for

dis-

Revised

financial component

reallocated

actuarial

Other

continued

2004

statements

of to

deriva-

gains

and

reclassifi-

opera-

com-

US Dollar million

2004

bond

(1)

tives

(1)

losses

cations

tion

(2)

Rounding

parative

Cash flow

Cash flows from operating activities

Receipts from customers

(3)

2,480 – – –

(56)

(92) –

2,332

Payments to suppliers and employees

(1,895)

–

(1,744)

Cash

generated

from

operations

585 – – – 1 2 –

588

Cash utilised from discontinued operations

–

(2)

–

(2)

Interest received

(5)

37 – – –

(37)

– –

–

Environmental, rehabilitation and other

expenditure

(6)

(24) – – – 6 – –

(18)

Finance costs

(5)

(72) – – –

72 – –

–

Taxation

paid

(34) – – – – – –

(34)

Net cash inflow from operating activities

492

–

534

Cash flows from investing activities

Capital expenditure

–

project

expenditure

(256) – – – – – –

(256)

–

stay-in-business

expenditure

(329) – – – – – –

(329)

Proceeds

from

disposal

tangible

assets

10 – – – – – –

Other investments acquired

(6)

(20) – – –

(10)

– –

(30)

(Acquisition) disposal of subsidiaries net

of cash

(7)

(171) – – –

171 – –

–

(Acquisition) disposal of subsidiaries

(7)

– – – –

(227)

– –

(227)

Cash in subsidiary acquired

(7)

– – – –

56 – –

Cash restricted for use

(4) (6)

– – – – (6) – –

(6)

Interest received

(5)

– – – –

37 – –

Loans

advanced

(2) – – – – – –

(2)

Repayment

loans

advanced

85 – – – – – –

Utilised

hedge

restructure

(123) – – – – – –

(123)

Net cash outflow from investing activities

(806)

–

(785)

Cash flows from financing activities
Proceeds

from

issue

capital

3 – – – – – –

issue

expenses

– – – – – – –

–

Proceeds

from

borrowings

1,077 – – – – – –

1,077

Repayment

borrowings

(818) – – – – – –

(818)

Finance costs

(5)

– – – –

(72)

– –

(72)

Dividends

paid

(198) – – – – – –

(198)

Proceeds

from

hedge

restructure

40 – – – – – –

Net cash inflow (outflow) from financing
activities

104 – – –

(72) – –

Net decrease in cash and cash
equivalents

(210) – – – (9) –

–

(219)

Translation

(8)

17 – – – (4) –

–

Cash and cash equivalents at beginning
of

year

505 – – –

(10) –

–

495

Net cash and cash equivalents at end
of

year

312 – – –

(23) –

–

289

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

217

Changes to comparative information (continued)

Change in

accounting policies

Reclassifications

Equity Change

Fair

portion

Ergo

Balance

value

of the

accounting

treated

per

adjustment

convertible

treatment

as a

annual

on option

bond

for

dis-

Revised

financial component

reallocated

actuarial

Other

continued

2004

statements

of to deriva-

gains

and

reclassifi-

opera-

com-

US Dollar million

2004

bond

(1)

tives

(1)

losses

cations

tion

(2)

Rounding

parative

Cash flow (continued)
Cash generated from operations
Profit

before

taxation

27 – – –

11 (1)

Adjusted for:
Non-cash movements

(9)

3 – – – 5 (5)

Movement

non-hedge

derivatives

185 – – – – (4)

–

181

Amortisation

tangible

assets

380 – – – – – –

380

Deferred

stripping

(21) – – – – – –

(21)

Interest received

(9)

(44) – – – (5)

– –

(49)

Operating special items

(10) (11)

–

– – –

(12)

– –

(12)

Finance costs and unwinding of
decommissioning

obligations

87 – – – – – –

Amortisation

intangible

assets

32 – – – – – –

Impairment of tangible assets

(10)

1 – – – (1) – –

–

Profit on disposal of assets and subsidiaries

(11)

(13) – – –

13 – –

–

Fair value adjustment on option component
of

convertible

bond

–

(27) –

– – – –

(27)

Movements

working

capital

(85) – – – 1 – –

(84)

585 – – – 1 2 –

588

Movements in working capital:
Increase

inventories

(56) – – – – – –

(56)

(Increase) decrease in trade and other
receivables

(4)

(41) – – – 1 – –

(40)

Increase in trade and other
payables

12 – – – – – –

(85) – – – 1 – –

(84)

(1)

The convertible bonds were previously accounted for as compound financial instruments, part equity and part liability. The equity component was not
remeasured for changes in fair value. Convertible bonds are now accounted for entirely as a liability, with the option component disclosed as a derivative liability, carried at fair value. Changes in such fair value are recorded in the income statement.

(2)

Ergo reclassified as a discontinued operation from 1 February 2005 as it has reached the end of its useful life.

(3)

Effect of reallocations within trade and other receivables on receipts from customers.

(4)

Reallocation of Disaster Compensation Fund to restricted cash.

(5)

Interest received and finance costs have been reclassified from operating activities to investing and financing activities respectively.

(6)

Contributions to the Environmental Rehabilitation Trust Fund reallocated to other investments acquired $6m, $4m reallocated to cash restricted for use.

(7)

Cash in subsidiaries acquired reclassified to be shown separately on the cash flow.

(8)

Translation on amounts reallocated to cash restricted for use.

(9)

Growth in AngloGold Environmental Rehabilitation Trust Fund reclassified as interest received.

(10)

Impairment of tangible assets reclassified to operating special items.

(11)

Profit on disposal of assets and subsidiaries reclassified to operating special items.

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

218

Changes to comparative information (continued)

Change in

accounting policies

Reclassifications

Equity Change

Fair

portion

Ergo

Balance

value

of the

accounting

treated

per

adjustment

convertible

treatment

as a

annual

on option

bond

for

dis-

Revised

financial component

reallocated

actuarial

Other

continued

2004

statements

of to deriva-

gains

and

reclassifi-

opera-

com-

SA Rand million

2004

bond

(1)

tives

(1)

losses cations

tion

(2)

Rounding

parative

Cash flow
Cash flows from operating activities
Receipts from customers

(3)

15,928 – – –

(314)

(591) –

15,023

Payments to suppliers and employees

(12,423)

–

319

603

–

(11,501)

Cash

generated

from

operations

3,505 – – – 5

12 –

3,522

Cash

utilised

from

discontinued

operations

– – – – –

(12)

–

(12)

Interest received

(5)

236 – – –

(236)

– –

–

Environmental, rehabilitation and other
expenditure

(6)

(148) – – –

35 – –

(113)

Finance costs

(5)

(465) – – –

465 – –

–

Taxation

paid

(218) – – – – – –

(218)

Net cash inflow from operating activities

2,910

–

269

–

3,179

Cash flows from investing activities
Capital expenditure

– project

expenditure

(1,645) – – – – – –

(1,645)

– stay-in-business

expenditure

(2,119) – – – – – –

(2,119)

Proceeds

from

disposal

tangible

assets

69 – – – – – –

Other investments acquired

(6)

(127) – – –

(69)

– –

(196)

(Acquisition) disposal of subsidiaries
net of cash

(7)

(1,139) – – –

1,139 – –

–

(Acquisition) disposal of subsidiaries

(7)

– – – –

(1,523)

– –

(1,523)

Cash in subsidiary acquired

(7)

– – – –

384 – –

384

Cash restricted for use

(4) (6)

– – – –

(45) – –

(45)

Interest received

(5)

– – – –

236 – –

236

Loans

advanced

(13) – – – – – –

(13)

Repayment

loans

advanced

539 – – – – – –

539

Utilised in hedge restructure

(703)

–

(703)

Net cash outflow from investing activities

(5,138)

–

(122)

–

(5,016)

Cash flows from financing activities
Proceeds

from

issue

capital

22 – – – – – –

issue

expenses

(1) – – – – – –

(1)

Proceeds

from

borrowings

7,236 – – – – – –

7,236

Repayment

borrowings

(5,348) – – – – – –

(5,348)

Finance costs

(5)

– – – –

(465)

– –

(465)

Dividends

paid

(1,322) – – – – – –

(1,322)

Proceeds

from

hedge

restructure

228 – – – – – –

228

Net cash inflow (outflow) from
financing

activities

815 – – –

(465) – –

350

Net decrease in cash and cash
equivalents

(1,413) – – –

(74) – –

(1,487)

Translation

(8)

(196) – – –

10 – –

(186)

Cash and cash equivalents at beginning
of

year

3,367 – – –

(64) – –

3,303

Net cash and cash equivalents at end
of

year

1,758 – – –

(128) – –

1,630

NOTES TO THE GROUP FINANCIAL STATEMENTS

for the year ended 31 December

219

Changes to comparative information (continued)

Change in

accounting policies

Reclassifications

Equity Change

Fair

portion

Ergo

Balance

value

of the

accounting

treated

per

adjustment

convertible

treatment

as a

annual

on option

bond

for

dis-

Revised

financial component

reallocated

actuarial

Other

continued

2004

statements

of to

deriva-

gains

and

reclassifi-

opera-

com-

SA Rand million

2004

bond

(1)

tives

(1)

losses

cations

tion

(2)

Rounding

parative

Cash generated from operations
Profit

before

taxation

517

160 – – –

68 –

745

Adjusted for:
Non-cash movements

(9)

3 – – –

(30)

–

Movement

non-hedge

derivatives

1,081 – – – –

(26)

–

1,055

Amortisation

tangible

assets

2,423 – – – – – –

2,423

Deferred

stripping

(144) – – – – – –

(144)

Interest receivable

(9)

(285) – – –

(33)

– –

(318)

Operating special items

(10) (11)

–

– – –

(80)

– –

(80)

Finance costs and unwinding of
decommissioning

obligation

563 – – – – – –

563

Amortisation

intangible

assets

208 – – – – – –

208

Impairment of tangible assets

(10)

8 – – – (8) – –

–

Profit on disposal of assets and
subsidiaries

(11)

(88) – – –

88 – –

–

Fair value adjustment on option component
of

convertible

bond

–

(160)

–

– – – –

(160)

Movements

working

capital

(781) – – – 5 – –

(776)

3,505 – – – 5

12 –

3,522

Movements in working capital:
Increase

inventories

(1) – – – – – –

(1)

(Increase) decrease in trade and other
receivables

(4)

(4) – – – 5 – –

Decrease

trade

and

other

payables

(776) – – – – – –

(776)

(781) – – – 5 – –

(776)

(1)

The convertible bonds were previously accounted for as compound financial instruments, part equity and part liability. The equity component was not
remeasured for changes in fair value. Convertible bonds are now accounted for entirely as a liability, with the option component disclosed as a derivative liability, carried at fair value. Changes in such fair value are recorded in the income statement.

(2)

Ergo reclassified as a discontinued operation from 1 February 2005 as it has reached the end of its useful life.

(3)

Effect of reallocations within trade and other receivables on receipts from customers.

(4)

Reallocation of Disaster Compensation Fund to restricted cash.

(5)

Interest received and finance costs have been reclassified from operating activities to investing and financing activities respectively.

(6)

Contributions to the Environmental Rehabilitation Trust Fund reallocated to other investments acquired R35m; R34m reallocated to cash restricted for use.

(7)

Cash in subsidiaries acquired reclassified to be shown separately on the cash flow.

(8)

Translation on amounts reallocated to cash restricted for use.

(9)

Growth in AngloGold Environmental Rehabilitation Trust Fund reclassified as interest received.

(10)

Impairment of tangible assets reclassified to operating special items.

(11)

Profit on disposal of assets and subsidiaries reclassified to operating special items.

Exchange rates

2005

2004

Rand/US dollar average for the year

6.37

6.44

Rand/US dollar closing

6.35

5.65

Rand/Australian dollar average for the year

4.85

4.82

Rand/Australian dollar closing

4.65

4.42

Australian dollar/US dollar average for the year

1.31

1.36

Australian dollar/US dollar closing

1.36

1.28

Income statement

The company annual financial statements represent the South African operations and corporate office.

These company annual financial statements are a statutory requirement, and are accordingly presented in SA rands only.

The functional currency of the company is SA rands.

COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

220

Revenue

8,261

7,594

Gold income

7,359

7,189

Cost of sales

(6,285)

(6,146)

Non-hedge derivative loss

(314)

(523)

Gross profit

760

520

Corporate administration and other expenses

(401)

(298)

Market development costs

(58)

(79)

Exploration costs

(148)

(144)

Impairment of investment in associate

(2)

(4)

Impairment of tangible assets

(45)

–

Other net operating expenses

(46)

(27)

Operating special items

–

Operating profit (loss)

(32)

Interest received

183

Net inter-company dividends and interest

–

Dividends received from subsidiaries

650

–

Exchange (loss) gain

(78)

Finance costs and unwinding of decommissioning and restoration obligations

(218)

(276)

Fair value (loss) gain on interest rate swaps

(5)

Profit (loss) before taxation

442

(35)

Taxation

(109)

646

Profit after taxation from continuing operations

333

611

Discontinued operations

Loss for the year from discontinued operations

Group 14

(219)

(73)

Profit for the year

114

538

Figures in million

Notes

2005

2004

SA Rands

COMPANY FINANCIAL STATEMENTS

as at 31 December

221

ASSETS

Non-current assets

Tangible assets

11,923

10,644

Investment in associate

Investments in subsidiaries

Page 246

14,816

14,813

Other investments

Investment in Environmental Rehabilitation Trust Fund

284

265

Intra-group balances

165

144

Derivatives

236

966

Other non-current assets

27,535

26,895

Current assets

Inventories

346

420

Trade and other receivables

385

370

Derivatives

2,091

2,260

Current portion of other non-current assets

–

Cash restricted for use

Cash and cash equivalents

2,840

3,149

Non-current assets held for sale

Group 27

100

–

2,940

3,149

Total assets

30,475

30,044

EQUITY AND LIABILITIES

Share capital and premium

Group 28

19,360

19,300

Retained earnings and other reserves

(3,333)

(1,881)

Total equity

16,027

17,419

Non-current liabilities

Borrowings

1,989

1,984

Environmental rehabilitation provisions

922

517

Provision for pension and post-retirement benefits

1,172

993

Intra-group balances

1,572

1,339

Derivatives

777

928

Deferred taxation

2,214

2,758

8,646

8,519

Current liabilities

Trade, other payables and deferred income

1,020

1,184

Current portion of borrowings

878

Derivatives

3,351

2,568

Taxation

553

281

5,802

4,106

Total liabilities

14,448

12,625

Total equity and liabilities

30,475

30,044

Figures in million

Notes

2005

2004

SA Rands

Balance sheet

Cash flow statement

COMPANY FINANCIAL STATEMENTS

as at 31 December

222

Cash flows from operating activities

Receipts from customers

7,549

7,334

Payments to suppliers and employees

(5,667)

(5,767)

Cash generated from operations

1,882

1,567

Dividends received from subsidiaries

650

–

Cash utilised by discontinued operations

(188)

(12)

Environmental, rehabilitation and other expenditure

(26)

–

Net cash inflow from operating activities

2,318

1,555

Cash flows from investing activities

Capital expenditure

– project expenditure

(904)

(1,022)

– stay-in-business expenditure

(1,313)

(1,150)

Proceeds from disposal of tangible assets

–

Proceeds from disposal of discontinued assets

–

Other investments acquired

(43)

(269)

Intra-group loans

193

2,000

Interest received

142

Loans advanced

(35)

–

Repayment of loans advanced

–

402

Utilised hedge restructure

–

(703)

Net cash outflow from investing activities

(2,048)

(596)

Cash flows from financing activities

Proceeds from issue of share capital

Share issue expenses

–

(1)

Proceeds from borrowings

809

229

Repayment of borrowings

–

(1,794)

Finance costs

(293)

(240)

Dividends paid

Group 16

(926)

(1,197)

Proceeds from hedge restructure

–

228

Net cash outflow from financing activities

(350)

(2,753)

Net decrease in cash and cash equivalents

(80)

(1,794)

Cash and cash equivalents at beginning of year

1,886

Net cash and cash equivalents at end of year

Figures in million

Notes

2005

2004

SA Rands

COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

223

Actuarial loss on defined benefit retirement plans

(1)

(note 17)

(176)

(18)

Net (gain) loss on cash flow hedges removed from equity and reported in income (note 17)

(102)

276

Net (loss) gain on cash flow hedges (note 17)

(785)

482

Deferred taxation on items above (note 17)

408

(272)

Share-based payment expense (note 17)

–

Net (expense) income recognised directly in equity

(640)

468

Profit for the year

114

538

Total recognised (expense) income for the year

(526)

1,006

(1)

The cumulative effect of the actuarial gains and losses accounted through equity is a net reduction of

R232m (2004: R124m) in reserves after deferred taxation of R132m (2004: R63m).

Figures in million

2005

2004

SA Rands

Statement of recognised income and expense

NOTES TO THE COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

224

Revenue

Revenue consists of the following principal categories:

Gold income

7,359

7,189

By-products and other revenue (note 2)

224

222

Interest received (note 23)

183

Dividend received from subsidiaries (note 23)

650

–

8,261

7,594

Cost of sales

Cash operating costs

5,129

5,382

By-products and other revenue (note 1)

(224)

(222)

4,905

5,160

Other cash costs

Total cash costs

(1)

4,939

5,210

Retrenchment costs (note 7)

158

Rehabilitation and other non-cash costs

105

Production costs

5,196

5,359

Amortisation of tangible assets (notes 6, 9 and 23)

1,109

753

Total production costs

6,305

6,112

Inventory change

(20)

6,285

6,146

(1)

Total cash costs include net refining fees.

Other net operating expenses

Pension and medical defined benefit provisions

Operating special items

Profit on sale of loan

–

Loan waived

(3)

–

Figures in million

2005

2004

SA Rands

NOTES TO THE COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

225

Finance costs and unwinding of decommissioning and
restoration obligations

Finance costs on bank loans and overdrafts

Finance costs on corporate bond

215

Finance costs on interest rate swap

(1)

Other finance costs

293

300

Less: amounts capitalised (note 9)

(102)

(67)

191

233

Unwinding of decommissioning obligation (note 19)

Unwinding of restoration obligation (note 19)

–

(note 23)

218

276

(1)

Interest received on the interest rate swap entered into against the corporate bond which has not
been designated as a fair value hedge was R24m (2004: R83m). The swap was unwound
in April 2005.

Profit (loss) before taxation

Profit (loss) before taxation is arrived at after taking account of:

Auditors' remuneration

– Statutory audit fees

– Under provision prior year

– Other assurance services

–

Amortisation of tangible assets (notes 2, 9 and 23)

Owned assets

1,109

753

Grants for educational and community development

Operating lease charges

258

234

Figures in million

2005

2004

SA Rands

NOTES TO THE COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

226

Employee benefits

Employee benefits including executive directors' salaries and other benefits

3,258

3,250

Health care and medical scheme costs

– current medical expenses

229

207

– defined benefit post-retirement medical expenses

Contributions to pension and provident plans

– defined contribution

122

180

– defined benefit

Retrenchment costs (note 2)

158

Share-based payment expense

(1)

–

Included in cost of sales and other operating expenses

3,888

3,811

Actuarial defined benefit plan expense analysis
Defined benefit pension plan expense

– current service cost

– interest cost

– expected return on plan assets

(106)

(95)

Defined benefit post-retirement medical expense

– current service cost

– interest cost

– recognised past service cost

–

Actual return on plan assets

– South Africa defined benefit pension plan

366

219

Refer to the remuneration report for details of directors' emoluments

(1)

Details of the equity settled share-based payment arrangements of the group have been disclosed in group note 12. These arrangements consist of awards by the company to employees of various group companies. The income statement expense of R12m for the company is only in respect of awards made to employees of the company.

Taxation

Current taxation

Non-mining taxation

–

229

Under provision prior year

264

–

264

229

Deferred taxation

Temporary differences

213

127

Unrealised non-hedge derivatives

(200)

(199)

Impairment

(15)

–

Change in statutory tax rate

(1)

(79)

–

Change in estimated deferred tax rate

(74)

(803)

(155)

(875)

109

(646)

Deferred taxation on continuing operations

(155)

(875)

Deferred taxation on discontinued operations

(note 21)

(136)

(870)

(1)

During the financial year there were changes in the South African statutory tax rates. These rates can be summarised as follows: Maximum statutory mining tax rate 45% (2004:46%), non-mining statutory tax rate 37% (2004: 38%), statutory company tax rate 29% (2004: 30%).

Figures in million

2005

2004

SA Rands

NOTES TO THE COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

227

Taxation (continued)

Tax reconciliation

A reconciliation of the mining and non-mining tax rate compared with that charged in the income statement is set out in the following table:

2005

2004

Non-mining Mining

% %

Current tax rate

37 37 38 38

Disallowable expenditure

9 (57) (3)

Mining capital allowances without tax cover

– 124

– (25)

Dividends received

(43) – – –

Taxable items not forming part of the income statement

(21)

(7)

(1)

Impairments

–

(15)

–

Impact of prior year under provisions

– (228) (37)

–

Change in estimated deferred tax rate

– 64

– (136)

Change in statutory tax rate

(10) 15

– –

Other

(2)

Effective tax rate

7 (58)

(5)

(114)

Tangible assets

Mineral rights,

Mine Mine

dumps and

development infra-

exploration

costs

structure

properties Land Total

SA Rands

Cost

Balance at 1 January 2004

11,046

3,438

699

15,203

Additions

– project expenditure

829

188

–

1,022

– stay-in-business

expenditure

1,001

82 – –

1,083

Transfers and other movements

(4)

–

Finance

costs

capitalised

(note

67 – – –

Balance at 31 December 2004

13,009

3,704

706

17,439

Accumulated amortisation

Balance at 1 January 2004

3,672

2,260

110

–

6,042

Amortisation for the year (notes 2, 6 and 23)

627

–

753

Transfers and other movements

(19)

–

Balance at 31 December 2004

4,318

2,326

151

–

6,795

Net book value at 31 December 2004

8,691

1,378

555

10,644

NOTES TO THE COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

228

Tangible assets (continued)

Mineral rights,

Mine Mine

dumps

and

development infra-

exploration

Figures in million

costs

structure

properties

Land

Total

SA Rands

Cost
Balance at 1 January 2005

13,009

3,704

706

17,439

Additions

– project expenditure

626

168

–

802

– stay-in-business

expenditure

1,252

61 – –

1,313

Disposals

– (26) – – (26)

Transfers and other movements

–

227

(156)

–

Finance costs capitalised (note 5)

102

–

102

Balance at 31 December 2005

14,989

4,134

558

19,701

Accumulated amortisation
Balance at 1 January 2005

4,318

2,326

151

–

6,795

Amortisation for the year (notes 2, 6 and 23)

950

123

–

1,109

Impairments (note 23)

–

Impairments reversal (Group note 14)

–

(115)

–

(115)

Transfers and other movements

–

(56)

–

(56)

Balance at 31 December 2005

5,313

2,334

131

–

7,778

Net book value at 31 December 2005

9,676

1,800

427

11,923

The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is 10.65% (2004: 10.65%).

Impairments include the following:

Figures in million

2005

2004

SA Rands

Goedgenoeg drilling and 1650 level decline drilling

–

An impairment charge was recognised during an assessment and review of exploration properties as
Goedgenoeg will not generate future cash flows.

East of Bank Dyke at TauTona

–

Due to a change in original mine plan, the East of Bank Dyke access development has been impaired
as it will not generate future cash flows.

–

The above impairments relate to impairments of mine development costs that were abandoned and will generate no future cash flows.

A register containing details of properties is available for inspection by shareholders or their duly authorised agents during business hours at
the registered office of the company.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

229

Investment in associate

The company has a 25.0% (2004: 26.6%) interest in Oro Group (Proprietary) Limited which is involved in

the manufacture and wholesale of jewellery. The year-end of Oro Group (Proprietary) Limited is 31 March.

Equity accounting is based on results to 30 September 2005.

Change in accounting policy for associate

The company changed its accounting policy for investments in associates. Previously investment in the

associate was equity accounted and the associate’s share of profits and losses was reported in the

company income statement and balance sheet.

The associate company is now recorded at cost less impairment. This change was made to comply with

IAS 28 which prohibits the use of equity accounting for associates in the separate financial statements

of the investor. IAS 28 (revised) is retrospectively applied for accounting periods beginning on or after

1 January 2005, accordingly comparatives have been restated.

The impact on comparative figures is as follows:

A decrease in income from associate after tax for 2004 of R1m and a decrease in retained earnings

brought forward prior to 2004 of R5m resulted in a decrease in investment in associate of R6m.

The carrying value of the associate consists of:

Unlisted shares at cost less impairments

Impairment

(1)

(2)

(4)

Carrying value

Directors' valuation of unlisted associate

The company's effective share of certain balance sheet items of its associate at 30 September 2005

is as follows:

Non-current assets

Current assets

Total assets

Non-current liabilities

Current liabilities

Total liabilities

Net assets

(1)

During the year, the Oro Group (Proprietary) Limited investment was impaired. The impairment test
considered the investment's fair value and future cash flow. An impairment of R2m (2004: R4m) was
recorded.

Figures in million

2005

2004

SA Rands

Other investments

Unlisted investments

Balance at beginning of year

Disposals

(1)

–

Balance at end of year (note 26)

Directors' valuation of unlisted investments

Inventories

Gold in process

179

165

Gold on hand

By-products

Total metal inventories

258

243

Consumable stores

177

346

420

Investment in Environmental Rehabilitation Trust Fund

Balance at beginning of year

265

230

Contributions

Rehabilitation expenditure incurred

(26)

–

Balance at end of year

284

265

The fund is managed by Rand Merchant Bank and mainly invested in government long bonds and

other fixed-term deposits.

Other non-current assets

AngloGold Ashanti Pension Fund (asset) (note 20)

–

Loans and receivables

Stone and Allied, unsecured, receivable over five years carrying interest at the repo rate

Other

Less: current portion of non-current assets included in current assets

–

Balance at end of year (note 26)

Trade and other receivables

Trade debtors

231

197

Prepayments and accrued income

107

Recoverable tax, rebates, levies and duties

Other debtors

(note 26)

385

370

Trade debtors are non-interest bearing and are generally on current terms less than 90 days.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

230

Figures in million

2005

2004

SA Rands

NOTES TO THE COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

231

Cash and cash equivalents

Cash and deposits on call

(note 26)

Retained earnings and other reserves

Foreign

Other

Non-

currency

Actuarial

compre-

Retained distributable

translation

gains

hensive

earnings

reserves

(1)

reserve (losses) (2)

income (3)

Total

SA Rands millions

Balance at December 2003 as previously

reported

(463) 141 (733)

– (517)

(1,572)

Change in accounting policy for actuarial

gains and losses

(112) (112)

Change in accounting policy for monetary assets

forming part of net investment (IAS 21 revised)

(733)

733

–

Change in accounting policy for

associates (IAS 28)

(6)

restated

(1,202) 141

– (112) (517)

(1,690)

Actuarial gains and losses recognised

(18)

Deferred taxation recognised directly

in equity (note 21)

6 6

Profit for the year

538

Dividends (Group note 16)

(1,197)

Net loss on cash flow hedges removed

from equity and reported in income

276

Net gain on cash flow hedges

482 482

Deferred taxation on cash flow

hedges (note 21)

(278) (278)

Balance at December 2004

(1,861) 141

– (124) (37)

(1,881)

Actuarial gains and losses recognised

(176)

Deferred taxation recognised directly

in equity (note 21)

Profit for the year

114

Dividends (Group note 16)

(926)

Net gain on cash flow hedges removed

from equity and reported in income

(102)

Net loss on cash flow hedges

(785)

Deferred taxation on cash flow hedges (note 21)

340

Share-based payment expense (Group note 29)

Balance at December 2005

(2,673)

141

–

(232)

(569)

(3,333)

(1)

Non-distributable reserves comprise a surplus on disposal of company shares of R141m (2004: R141m).

(2)

With the adoption of IAS 19 revised, actuarial gain and loss movements are accounted through equity reserves. Actuarial gains and losses arise from a change in assumption parameters and the difference between the actual and expected return on plan assets.

(3)

Figures in million

2005

2004

SA Rands

Borrowings

Unsecured

Corporate Bond

(1)

2,062

2,057

Semi-annual coupons are payable at 10.5% per annum and the bond is repayable on

28 August 2008 and is rand-based.

Money-market short-term borrowings, at market-related rates and are rand-based

805

–

Total borrowings (note 26)

2,867

2,057

Less: current portion of borrowings included in current liabilities

878

Total long-term borrowings

1,989

1,984

Amounts falling due:

Within one year

878

Between two and five years

1,989

1,984

(note 26)

2,867

2,057

Undrawn facilities

There were no undrawn borrowing facilities as at 31 December 2005 (2004: nil).

(1)

Corporate Bond

Senior unsecured fixed rate bond

2,000

Less: unamortised discount and bond issue costs

1,989

1,984

Add: accrued interest

2,062

2,057

Environmental rehabilitation provisions

Provision for decommissioning

Balance at beginning of year

298

191

Change in estimates

(1)

181

Unwinding of decommissioning obligation (note 5)

Balance at end of year

498

298

Provision for restoration

Balance at beginning of year

219

133

Charge to income statement

(82)

Change in estimates

(1)

304

–

Unwinding of restoration obligation (note 5)

–

Utilised during the year

(25)

–

Balance at end of year

424

219

Total environmental rehabilitation provisions

922

517

These provisions are anticipated to unwind beyond the end of the life of mine.

(1)

The change in estimates relates to changes in laws and regulations governing the protection of the environment and
factors relative to rehabilitation estimates and a change in the quantities of material in reserves and a corresponding
change in the life of mine plan.

Figures in million

2005

2004

SA Rands

NOTES TO THE COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

232

NOTES TO THE COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

233

Figures in million

2005

2004

SA Rands

Provision for pension and post-retirement benefits

Defined benefit plans

The company has made provision for pension provident and medical schemes covering substantially

all employees. The retirement schemes consist of the following:

AngloGold Ashanti Pension Fund (asset) (Group note 33)

(51)

Post-retirement medical scheme for AngloGold Ashanti South African employees (Group note 33)

1,172

924

1,121

993

Transferred to other non-current assets

AngloGold Ashanti Pension Fund (note 14)

–

1,172

993

Deferred taxation

Deferred taxation relating to temporary differences is made up as follows:

Deferred taxation liabilities

Tangible assets

3,535

3,386

Inventories

Derivatives

105

159

Other

3,716

3,619

Deferred taxation assets

Provisions

638

474

Derivatives

802

257

Tax assets

130

1,502

861

Net deferred taxation liability

2,214

2,758

The movement on the net deferred tax liability is as follows:

Balance at beginning of year

2,758

3,356

Income statement charge (note 8)

(136)

(870)

Taxation on other comprehensive income (note 17)

(340)

278

Taxation on actuarial loss (note 17)

(68)

(6)

Balance at end of year

2,214

2,758

Trade and other payables

Trade creditors

184

349

Accruals

490

485

Amounts due to related parties

Unearned premiums on normal sale exempted contracts

315

326

Other creditors

(note 26)

1,020

1,184

Trade and other payables are non-interest bearing and are normally settled within 60 days.

Cash generated from operations

Profit (loss) before taxation

442

(35)

Adjusted for:

Non-cash movements

162

Movement on non-hedge derivatives

717

960

Amortisation of tangible assets (notes 2, 6 and 9)

1,109

753

Interest received (note 1)

(28)

(183)

Dividends received from subsidiaries (note 1)

(650)

–

Finance costs and unwinding of decommissioning and restoration obligations (note 5)

218

276

Impairment of investment in associate (note 10)

Impairment of tangible assets (note 9)

–

Operating special items (note 4)

(1)

–

Movements in working capital

(134)

(225)

1,882

1,567

Movements in working capital:

Decrease (increase) in inventories

(30)

(Increase) decrease in trade and other receivables

(13)

Decrease in trade and other payables

(195)

(264)

(134)

(225)

Figures in million

2005

2004

SA Rands

NOTES TO THE COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

234

NOTES TO THE COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

235

Related parties

Details of material transactions with those related parties not dealt with elsewhere in the financial statements are summarised below:

2005 2004

Purchases

Amounts Purchases

Amounts

from

owed to

from

owed to

related related

parties parties

parties

SA Rands million

Holding company Anglo American plc

–

Subsidiaries of AngloGold Ashanti Limited

AGRe Insurance Company Limited

41 –

–

AngloGold Health Service (Pty) Limited

264 22

129

Rand Refinery Limited

18 2

Fellow subsidiaries of the Anglo American plc group

Anglo Coal – a division of Anglo Operations Limited

4 2

Boart Longyear Limited – mining services

(1)

28 –

Haggie Steel Wire Rope Operations

(2)

–

Mondi Limited – timber

105 11

101

Scaw Metals – a division of Anglo Operations Limited – steel and

engineering

31 4

The Tongaat-Hulett Group Limited

–

Management fees, royalties and dividends from subsidiaries amount to R659m (2004: R31m). This consists mainly of R650m, being a dividend

received from AngloGold Ashanti Holdings plc.

Directors and other key management personnel

Details relating to directors’ emoluments and shareholdings in the company are disclosed in the remuneration and directors’ reports (detailed

on pages 113 to 126).

Compensation to key management personnel totalled R79m (2004: R55m). This total comprised short-term employee benefits of R69m

(2004: R51m), post-employment benefits of R7m (2004: R4m); and share-based payments of R3m (2004: nil).

Amounts owed to related parties are unsecured non-interest bearing and normally settled within 60 days

(1)

Anglo American plc sold their interest in Boart Longyear Limited with effect from 29 July 2005.

(2)

Contractual commitments and contingencies

Operating leases
At 31 December 2005, the company was committed to making the following payments in respect of
operating leases for amongst others, hire of plant and equipment and land and buildings.

Expiry within

– One year

– Between one and two years

–

– Between two and five years

–

– After five years

–

2005

2004

SA Rands

NOTES TO THE COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

236

Figures in million

2005

2004

SA Rands

Contractual commitments and contingencies (continued)

Capital commitments
Acquisition of tangible assets

Contracted for

542

551

Not contracted for

3,146

3,195

Authorised by the directors

3,688

3,746

Allocated for:
Project expenditure

– within one year

948

1,285

– thereafter

641

833

1,589

2,118

Stay-in-business expenditure

– within one year

1,867

610

– thereafter

232

1,018

2,099

1,628

This expenditure will be financed from existing cash resources, cash from operations and future borrowings.

Contingent liabilities

AngloGold Ashanti has signed as surety in favour of the bankers on the Yatela loan.

The South African Department of Water Affairs and Forestry issued a new Directive on 1 November 2005

ordering the four mining groups, Simmer and Jack Investments (Proprietary) Limited, Simmer and Jack

Mines Limited (collectively known as Simmers who purchased the Buffelsfontein shafts from DRDGold

Limited), Harmony Gold Mining Company Limited, AngloGold Ashanti and Stilfontein Gold Mining

Company to share equally, the costs of pumping water at Stilfontein’s Margaret Shaft. This follows an

interdict application made by AngloGold Ashanti in response to DRDGold Limited’s threat to cease

funding the pumping of water at the Margaret and Buffelsfontein shafts, after placing Buffelsfontein, its

subsidiary that operated the North West operations, into liquidation on 22 March 2005. Simmers have

purchased the Buffelsfontein shafts from DRDGold Limited and have assumed the environmental and

water management liabilities associated with the Buffelsfontein shafts.

The directive also orders the mining companies to submit an agreement and a joint proposal towards the

long term sustainable management of water arising from the mining activities in the area. The company

believes that it is not liable to fund these pumping costs but cannot make any assurances

regarding the ultimate result until the matter has been settled.

–

AngloGold Ashanti has identified a number of groundwater pollution sites at its current operations in

South Africa. The company has investigated a number of different technologies and methodologies

that could possibly be used to remediate the pollution plumes. The viability of the suggested remediation

techniques in the local geological formation in South Africa is however unknown. No sites have been

remediated in South Africa. Present research and development work is focused on several pilot projects

to find a solution that will in fact yield satisfactory results in South African conditions. Subject to the

technology being developed as a remediation technique no reliable estimate can be made for the obligation.

–

NOTES TO THE COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

237

Contractual commitments and contingencies (continued)

Following the decision to discontinue operations at Ergo in 2005, employees surplus to requirements

have been terminated and retrenchment packages settled. Ergo continues to retain various staff

members to complete the discontinuance and the attendant environmental obligations which are

expected to be completed by 2015. Retained employees may resign, be transferred within the

group, attain retirement age or be retrenched as their current position is made redundant. The company

is currently unable to determine the effects, if any, of any potential retrenchment costs.

–

AngloGold Ashanti has undertaken to re-export certain gold artifacts, temporarily imported into South

Africa, for which custom and value added tax was waived. The company will be required to pay if it

fails to comply with the re-export arrangements agreed with the South African Revenue Service.

The company has provided surety in favour of the lender in respect of gold loan facilities with two wholly-

owned subsidiaries of Oro Group (Proprietary) Limited an associate of the company. The company has

a total maximum liability, in terms of the suretyships, of R100m. The suretyship agreements have a

termination notice period of ninety days.

100

–

137

Guarantees

The company has guaranteed all payments and other obligations of AngloGold Ashanti Holdings plc

regarding the convertible bonds issued during 2004, with a final maturity date of 27 February 2009. The

bonds issued amounted to $1 billion at 2.375%. The company obligations regarding the guarantee will

be direct, unconditional and unsubordinated.

Financial risk management activities

In the normal course of its operations, the company is exposed to gold price, currency, interest rate,

liquidity and credit risks. In order to manage these risks, the company may enter into transactions which

make use of both on-and-off-balance sheet derivatives. The company does not acquire, hold or issue

derivatives for trading purposes. The company has developed a comprehensive risk management

process to facilitate, control and to monitor these risks. The board has approved and monitors this risk

management process, inclusive of documented treasury policies, counterpart limits, controlling and

reporting structures.

Controlling risk in the company

The Executive Committee and the Treasury Committee are responsible for risk management activities

within the company. The Treasury Committee, chaired by the independent chairman of the AngloGold

Ashanti Audit and Corporate Governance Committee, comprising executive members and treasury

executives, reviews and recommends to the Executive Committee all treasury counterparts, limits,

instruments and hedge strategies. The treasurer is responsible for managing investment, gold price,

currency, liquidity and credit risk. Within the treasury function, there is an independent risk function,

which monitors adherence to treasury risk management policy and counterpart limits and provides

regular and detailed management reports.

The financial risk management objectives of the company are defined as follows:

•

Safeguarding the company core earnings stream from its major assets through the effective control

and management of gold price risk, foreign exchange risk and interest rate risk;

•

Effective and efficient usage of credit facilities in both the short and long term through the adoption of

reliable liquidity management planning and procedures;

•

Ensuring that investment and hedging transactions are undertaken with creditworthy counterparts;

•

Ensuring that all contracts and agreements related to risk management activities are coordinated,

consistent throughout the company and comply where necessary with all relevant regulatory and

statutory requirements.

Figures in million

2005

2004

SA Rands

NOTES TO THE COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

238

Financial risk management activities (continued)

Gold price and currency risk and cash flow hedging

Gold price risk arises from the risk of an adverse effect on current or future earnings resulting from fluctuations in the price of gold. The gold
market is predominately priced in US dollars which exposes the company to the risk that fluctuations in the SA rand/US dollar exchange rates
may also have an adverse effect on current or future earnings.

A number of products, including derivatives, are used to manage well-defined gold price and foreign exchange risks that arise out of the
company's core business activities. Forward-sales contracts and call and put options are used by the company to protect itself from
downward fluctuations in the gold price. These derivatives may establish a minimum price for a portion of future production while the company
maintains the ability to benefit from increases in the gold price for the majority of future gold production.

Some of the instruments described above are designated and accounted for as cash flow hedges. The hedge forecast transactions are
expected to occur over the next 10 years, in line with the maturity dates of the hedging instruments and will affect profit and loss
simultaneously in an equal and opposite way. The fair value of all instruments so designated at the balance sheet date is negative R878m.

Net delta open hedge position as at 31 December 2005

The company had the following net forward-pricing commitments outstanding against future production.

Summary: All open contracts in the company's commodity hedge position as at 31 December 2005

Year 2006

2007

2008

2009

2010

2011-2015

Total

US Dollar/Gold

Forward contracts
Amount (kg)

(10,755)

(1)

106

4,588

5,964

3,437

7,527

10,867

$/oz

$363

$810 $386 $440 $422 $505 $537

Put options purchased
Amount (kg)

4,354

$/oz

$372

Put options sold
Amount (kg)

6,532

855

1,882

7,527

18,678

$/oz

$389

$390 $400 $410 $435 $411

Call options purchased
Amount (kg)

10,202

4,354

14,556

$/oz

$343

$336

$341

Call options sold
Amount (kg)

21,675

18,203

18,390

20,147

18,833

37,013

134,261

$/oz

$383

$371 $384 $404 $409 $483 $416

Rand/Gold

Forward contracts
Amount (kg)

2,449

933

3,382

R/kg

R97,520

R116,335

R102,711

Put options purchased
Amount (kg)

1,875

R/kg

R93,602

Put options sold
Amount (kg)

2,333

R/kg

R93,713

Call options sold
Amount (kg)

3,306

311

2,986

12,575

R/kg

R102,447

R108,123

R202,054

R216,522 R230,990 R183,851

Total net gold
Delta (kg)

(2)

1,711 15,732 21,679 25,471 20,850 38,484

123.927

Delta (oz)

(2)

55,010 505,795 696,995 818,910 670,342

1,237,288

3,984,340

(1)

Indicates a long position resulting from forward purchase contracts. The company enters into forward purchase contracts as part of its strategy to actively
manage and reduce the size of the hedge book.

(2)

The delta of the hedge position indicated above, is the equivalent gold position that would have the same marked-to-market sensitivity for a small change in the gold price. This is calculated using the Black-Scholes option formula with the ruling market prices, interest rates and volatilities as at 31 December 2005.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

239

Financial risk management activities (continued)

Summary: All open contracts in the company’s currency hedge position as at 31 December 2005

Year 2006

2007

2008

2009

2010

2011-2015

Total

Rand/US Dollar (000)

Put options purchased

Amount ($)

60,000

R per $

R6.89

Put options sold

Amount ($)

60,000

R per $

R6.56

Call options sold

Amount ($)

60,000

R per $

R7.28

The mix of hedging instruments, the volume of production hedged and the tenor of the hedging book is continually reviewed in the light

of changes in operational forecasts, market conditions and the company's hedging policy.

Forward sales contracts require the future delivery of gold at a specified price.

A put option gives the put buyer the right, but not the obligation, to sell gold to the put seller at a predetermined price on a predetermined date.

A call option gives the call buyer the right, but not the obligation, to buy gold from the call seller at a predetermined price on a predetermined date.

Interest rate and liquidity risk

Refer note 40 in group financial statements.

Cash maturity profile

Fixed rate

Floating rate

investment

Effective

investment

Effective

amount

rate

amount rate

Maturity date

Currency

million

All less than one year

ZAR

–

5.5

Between

Borrowings maturity profile (note 19)

Within one year

one and five years

Borrowing

Effective

Borrowing

Effective

amount

rate

amount rate

Currency

million

ZAR

878

(1)

7.4

1,989

10.5

Between

Interest rate risk

Within one year

one and five years

Borrowing

Effective

Borrowing

Effective

amount

rate

amount rate

Currency

million

ZAR

878

(1)

7.4

1,989

10.5

(1)

Includes R73m interest accrual on corporate bond as at 31 December 2005.

Interest rate swap

Refer note 40 in group financial statements.

Credit risk

Refer note 40 in group financial statements.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

240

Financial risk management activities (continued)

Fair value of financial instruments
The estimated fair values of financial instruments are determined at discrete points in time based on relevant market information. These
estimates involve uncertainties and cannot be determined with precision. The estimated fair values of the company’s financial instruments as
at 31 December 2005 are as follows:

Type of instrument

2005

2004

Carrying

Fair

Carrying

Fair

Figures in million

amount

value

Amount

Value

SA Rands

Financial assets
Other investments (note 11)

Other non-current assets (note 14)

Trade and other receivables (note 15)

243

210

Cash restricted for use

Cash and cash equivalents (note 16)

Financial liabilities
Borrowings (note 18)

2,867

2,993

2,057

2,207

Trade and other payables (note 22)

706

858

Derivatives comprise the following:

(1,801)

(4,627)

(270)

(2,158)

Forward sale commodity contracts

(423)

173

121

Option contracts

(1,387)

(4,213)

(482)

(2,318)

Foreign exchange contracts

–

(3)

Foreign exchange option contracts

(3)

Interest rate swaps

(3)

The amounts in the tables above do not necessarily agree with the totals in the notes referenced as only financial assets and financial liabilities
are shown.

Type of instrument

2005

Cash flow

Normal sale

hedge

Non-hedge

Figures in million

exempted

accounted

Total

SA Rands

Derivatives comprise the following:

(2,826)

(878)

(923)

(4,627)

Forward sale commodity contracts

–

(856)

433

(423)

Option contracts

(2,826)

(22)

(1,365)

(4,213)

Foreign exchange contracts

–

Foreign exchange option contracts

–

Interest rate swaps

–

(3)

2004

Cash flow

Normal sale

hedge

Non-hedge

Figures in million

exempted

accounted

Total

SA Rands

Derivatives comprise the following:

(1,888)

(502)

232

(2,158)

Forward sale commodity contracts

(52)

(481)

654

121

Option contracts

(1,836)

(21)

(461)

(2,318)

Foreign exchange contracts

–

(3)

Foreign exchange option contracts

–

(3)

Interest rate swaps

–

NOTES TO THE COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

241

Financial risk management activities (continued)

Derivative maturity profile

2005

Figures in million

Total

Assets

Liabilities

SA Rands

Total

(1,801)

2,327

(4,128)

Less: Amounts to mature within 12 months of balance sheet date

1,260

(2,091)

3,351

Amounts to mature between one and two years

155

(182)

337

Amounts to mature between two and five years

386

(54)

440

Amounts to mature thereafter

–

2004

Figures in million

Total

Assets

Liabilities

SA Rands

Total

(270)

3.226

(3,496)

Less: Amounts to mature within 12 months of balance sheet date

308

(2,260)

2,568

Amounts to mature between one and two years

(89)

(635)

546

Amounts to mature between two and five years

(331)

344

Amounts to mature thereafter

(38)

–

(38)

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Trade and other receivables, cash restricted for use, cash and cash equivalents and trade and other payables

The carrying amounts approximate fair value because of the short-term duration of these instruments.

Other investments and other non-current assets

Other investments are carried at amortised cost which approximates fair value. The fair value of other non-current assets has been calculated

using market interest rates.

Borrowings

The fair value of listed fixed rate debt is shown at its closing market value as at 31 December 2005. The remainder of debt re-prices on a

short-term floating rate basis, and accordingly the carrying amount is considered to approximate fair value.

Derivatives

The fair values of derivatives are estimated based on the ruling market prices, volatilities and interest rates as at 31 December 2005.

The company uses the Black-Scholes option pricing formula to value option contracts. One of the inputs into the model is the level of volatility.

These volatility levels are themselves not exchange traded and are not observable generally in the market. The company uses volatility input

supplied by leading market participants (international banks). The company believes that no other possible alternative would result in

significantly different fair value estimations.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

242

Changes to comparative information

Change in

accounting policies

Reclassifications

Change

Ergo

Balance

accounting

treated

per

treatment

Adoption as

annual

for

of IAS 28

dis-

Revised

financial

actuarial

(account-

Other

continued

2004

statements

gains and

Adoption

ing for

reclassifi-

opera-

com-

SA Rands million

2004

losses of IAS 21

(1)

associates)

(2)

cations

tion

(3)

Rounding

parative

Income statement

Revenue

8,185

–

– – –

(591)

–

7,594

Gold

income

7,749

–

– – –

(560)

–

7,189

Cost

sales

(6,774)

–

– – –

628 –

(6,146)

Non-hedge derivative loss

(4)

–

– –

(523)

–

(523)

Gross profit

975

–

– –

(523)

68 –

520

Corporate administration and other

expenses

(297)

–

– – –

–

(1)

(298)

Market development costs

(79)

–

(79)

Exploration

costs

(144)

–

– – –

–

(144)

Amortisation of intangible assets

(5)

–

Impairment of tangible assets

and investments

–

(4)

–

(4)

Non-hedge derivative loss

(4)

(523)

–

– –

523 –

–

Other net operating expenses

(27)

–

(27)

Operating profit

(100)

–

– – –

68 –

(32)

Interest

received

183

–

– – –

–

183

Exchange

gain

–

78 – –

–

Other net income

–

(1)

–

Finance costs and unwinding of

decommissioning and restoration

obligation

(276)

–

– – –

–

(276)

Fair value gain on interest

rate

swaps

–

– – –

–

Loss before taxation

(180)

–

78 (1) –

68 –

(35)

Taxation

641

–

– – –

5 –

646

Loss after taxation from

continuing operations

461 –

(1)

–

611

Discontinued

operations

–

– – –

(73)

–

(73)

Profit for the year

461 –

(1)

–

538

(1)

In the company financial statements, as a result of adopting IAS 21 (revised), exchange differences arising on a monetary item that forms part of the company’s net investment in a foreign operation is recognised in the income statement. The effect of this change in accounting policy is that in the company financial statements for 2004, R78m has been recognised in the income statement instead of in equity.

(2)

Share of associate’s profit reclassified from other net income to comply with IAS 28.

(3)

Ergo reclassified as a discontinued operation from 1 February 2005 as it has reached the end of its useful life.

(4)

Non-hedge derivative loss reclassified to be included in gross profit.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

243

Changes to comparative information (continued)

Change in

accounting policies

Reclassifications

Change

Ergo

Balance

accounting

treated

per

treatment

Adoption as

annual

for

of IAS 28

dis-

Revised

financial

actuarial

(account-

Other

continued

2004

statements

gains and

Adoption

ing for

reclassifi-

opera-

com-

SA Rands million

2004

losses

(1)

of IAS 21

associates)

(2)

cations

tion

Rounding

parative

Balance sheet
ASSETS
Non-current assets
Tangible assets

10,644

–

– – –

–

10,644

Investments in associates

–

(6)

–

Investment in subsidiaries

14,813

–

14,813

Other

investments

–

– – –

–

Investment in Environmental
Rehabilitation Trust Fund

265

–

– – –

–

265

Intra-group

balances

144

– – – –

–

144

Derivatives

966

–

– – –

–

966

Other non-current assets

(3)

53 (113)

– –

69 –

–

26,945 (113)

–

(6)

69 –

–

26,895

Current assets
Inventories

420

–

– – –

–

420

Trade and other receivables

(4)

377 –

–

(6)

–

(1)

370

Derivatives

2,260

–

– – –

–

2,260

Current portion of other non-current assets

–

Cash restricted for use

(4)

–

– – 6 –

–

Cash and cash equivalents

–

3,150

–

– – –

–

(1)

3,149

Total assets

30,095 (113)

–

(6)

69 –

(1)

30,044

EQUITY AND LIABILITIES
Share capital and premium

19,300

–

19,300

Retained earnings and other reserves

(1,749)

(125)

–

(6)

–

(1)

(1,881)

Total equity

17,551

(125)

–

(6)

–

(1)

17,419

Non-current liabilities
Borrowings

1,984

–

– – –

–

1,984

Environmental rehabilitation provisions

517

–

517

Provision for pension and post-
retirement benefits

(3)

849

75 – –

69 –

–

993

Intra-group

balances

1,338

–

– – –

–

1,339

Derivatives

928

–

– – –

–

928

Deferred

taxation

2,821 (63)

– – –

–

2,758

8,437

12 – –

69 –

8,519

Current liabilities
Trade and other payables

1,184

–

1,184

Current portion of borrowings

–

Derivatives

2,569

–

– – –

–

(1)

2,568

Taxation

281

–

– – –

–

281

4,107

–

– – –

–

(1)

4,106

Total

liabilities

12,544

12 – –

69 –

–

12,625

Total equity and liabilities

30,095 (113)

–

(6)

69 –

(1)

30,044

(1)

AngloGold Ashanti has adopted IAS 19 (revised) whereby actuarial gains and losses are recognised through equity reserves.

(2)

Investment in associate recorded at cost less impairment, with the adoption of IAS 28.

(3)

Reclassification of AngloGold Ashanti Pension Fund credit balance from other non-current assets to provisions for pension and post-retirement benefits.

(4)

Reallocation of Disaster Compensation Fund from trade and other receivables to cash restricted for use.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

244

Changes to comparative information (continued)

Change in

accounting policies

Reclassifications

Change

Ergo

Balance

accounting

treated

per

treatment

Adoption as

annual

for of

IAS

dis-

Revised

financial

actuarial

(account-

Other

continued

2004

statements

gains and

Adoption

ing for

reclassifi-

opera-

com-

SA Rands million

2004

losses

of IAS 21

associates)

cations

tion

(1)

parative

Cash flow

Cash flows from operating activities

Receipts from customers

(2)

8,048 –

– –

(123)

(591)

7,334

Payments to suppliers and employees

(6,524)

–

154

603

(5,767)

Cash generated from operations

1,524

–

1,567

Cash utilised from discontinued operations

–

(12)

Interest received

(3)

142 –

– –

(142)

–

Environmental contributions

(4)

(35) –

– –

35 –

–

Finance costs

(3)

(276) –

– –

276 –

–

Net cash inflow from operating activities

1,355

–

200

–

1,555

Cash flows from investing activities

Capital expenditure

– project expenditure

(1,022)

–

(1,022)

– stay-in-business expenditure

(1,083)

–

(67)

–

(1,150)

Proceeds from disposal of tangible assets

–

Other investments acquired

(4)

(234) –

– –

(35)

–

(269)

Intra-group

loans

2,000 –

– – –

–

2,000

Interest received

(3)

–

– –

142 –

142

Repayment of loans advanced

402

–

402

Utilised in hedge restructure

(703)

–

(703)

Net cash outflow from investing activities

(636)

–

(596)

Cash flows from financing activities

Proceeds from issue of share capital

–

Share issue expenses

(1)

–

(1)

Proceeds

from

borrowings

229 –

– – –

–

229

Repayment of borrowings

(1,794)

–

(1,794)

Finance costs

(3) (5)

–

– –

(240)

–

(240)

Dividends

paid

(1,197) –

– – –

–

(1,197)

Proceeds from hedge restructure

228

–

228

Net cash outflow from financing activities

(2,513)

–

(240)

–

(2,753)

Net decrease in cash and cash equivalents

(1,794)

–

(1,794)

Cash and cash equivalents at beginning of year

1,886

–

1,886

Net cash and cash equivalents at end of year

–

(1)

Ergo reclassified as a discontinued operation from 1 February 2005 as it has reached the end of its useful life.

(2)

Effect of reallocation within trade and other receivables on receipts from customers.

(3)

Interest received and finance costs have been reclassified from operating activities to investing and finance activities respectively.

(4)

Contributions to the Environmental Rehabilitation Trust Fund reallocated to other investments acquired.

(5)

Reallocation of non-cash portion of finance costs to other non-cash movements.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

for the year ended 31 December

245

Changes to comparative information (continued)

Change in

accounting policies

Reclassifications

Change

Ergo

Balance

accounting

treated

per

treatment

Adoption as

annual

for

of IAS 28

dis-

Revised

financial

actuarial

(account-

Other

continued

2004

statements

gains and

Adoption

ing for

reclassifi-

opera-

com-

SA Rands million

2004

losses of IAS 21

(1)

associates)

(2)

cations

tion

(3)

parative

Cash generated from operations

Profit before taxation

(180)

–

(1)

–

(35)

Adjusted for:

Non-cash movements

(4) (5)

98 –

(78)

–

(30)

Movement on non-hedge derivatives

986

–

(26)

960

Amortisation of tangible assets

753

–

753

Deferred

stripping

–

– – –

–

Interest

receivable

(183) –

– – –

–

(183)

Profit from associates after taxation

(1)

–

Finance costs and unwinding of decommissioning

obligation

276 –

– – –

–

276

Amortisation

intangible

assets

4 –

– – – –

Profit on disposal of assets

(4)

–

Movements in working capital

(225)

–

(225)

1,524 –

– –

1,567

Movements in working capital:

Increase in inventories

(30)

–

(30)

Decrease in trade and other receivables

–

Decrease in trade and other payables

(264)

–

(264)

(225) –

– – –

–

(225)

(1)

(2)

Share of associates profit reclassified from other net income to comply with IAS 28.

(3)

Ergo reclassified as a discontinued operation from 1 February 2005 as it has reached the end of its useful life.

(4)

Reallocation of non-cash portion of finance costs to other non-cash movements.

(5)

Reallocation of interest capitalised from other non-cash movements to capital expenditure.

246

Investment in principal subsidiaries and joint venture interests

Country

Nature

Shares held

Percentage held

Book value

Net loan account

incor-

2005 2004 2005

2004

2005

2004

2005

2004

poration

business

% % Rm Rm Rm Rm

Direct investments

Advanced Mining Software Limited

40,000

100

(9)

(12)

AGRe Insurance Company Limited

100

–

AngloGold American Investments Limited

1,001

100

849

(44)

(39)

AngloGold Ashanti USA Incorporated

100

768

–

500* 500* 100

100

655

–

AngloGold Health Service (Pty) Limited

100

–

AngloGold Ashanti Holdings plc

2,077,313,678

100

11,195

11,192

(496)

(393)

AngloGold Offshore Investments Limited

5,000,000

100

272

–

Eastvaal Gold Holdings Limited

454,464,000

100

917

(602)

(604)

Masakhisane Investment Limited

100

–

Nuclear Fuels Corporation of SA (Pty) Limited

1,450,000

100

(162)

(63)

Rand Refinery Limited **

208,471

53.03

116

–

Southvaal Holdings Limited (in voluntary liquidation)

26,000,000

100

(3)

Indirect investments

AG Mali Holdings 1 Limited

10,002

100

–

AG Mali Holdings 2 Limited

10,002

100

–

AngloGold Argentina Limited

100

–

AngloGold Argentina S.A.

1,331,093

100

–

AngloGold Ashanti Australia Limited

257,462,077

100

–

AngloGold Ashanti (Bibiani) Limited

4,500

100

–

AngloGold Ashanti (Colorado) Corp.

1,250

100

–

AngloGold Ashanti Exploration (Ghana) Limited

100

–

(2)

–

AngloGold Ashanti (Ghana) Limited

132,419,585

100

–

AngloGold Ashanti Holdings plc

B 1,024,840,886* 1,024,840,886*

100

–

AngloGold Ashanti (Iduapriem) Limited

53,016

–

AngloGold Ashanti Mineração Ltda.

A 22,194,302,378 22,194,302,378

100

–

AngloGold Ashanti (Nevada) Corp.

100

–

AngloGold Ashanti North America Inc.

7,902

100

–

AngloGold Australia Investment Holdings Limited

1,000

100

–

AngloGold Australia (Sunrise Dam) Pty Limited

100

–

AngloGold Ashanti Brasil Ltda.

8,827,437,875

100

–

AngloGold Brazil Limited

100

–

AngloGold CV 1 Limited

11,002

100

–

AngloGold CV 2 Limited

1,002

100

–

AngloGold CV 3 Limited

1,002

100

–

AngloGold Finance Australia Holdings Limited

100

–

AngloGold Finance Australia Limited

100

–

AngloGold Geita Holdings Limited

3,513

100

–

AngloGold Investments Australasia Limited

1,000

100

–

AngloGold Investments Australia Pty Ltd

100

–

AngloGold Investments (Sadex) Limited

1,000'A'

100

–

AngloGold Morila Holdings Limited

1,000

100

–

AngloGold Namibia (Pty) Ltd

10,000

100

–

AngloGold North American Holdings Limited

100

–

AngloGold Offshore Investments Limited

422,510,000*

100

–

AngloGold South America Limited

488,000

100

–

(172)

(153)

AngloGold South American Holdings Limited

100

–

Ashanti Goldfields Belgium S.A.

2,500

100

–

Ashanti Goldfields (Cayman) Limited

100

–

Ashanti Goldfields Holding (Luxembourg) S.A.

3,000,000

100

–

Ashanti Goldfields Kilo Sarl

15,520

86.22

–

Ashanti Goldfields Services Limited

588,409

100

–

Ashanti Goldfields Teberebie Limited

100

–

Ashanti Goldfields Zimbabwe Limited

–

265,570,717

–

100

–

Ashanti Treasury Services Limited

250,000

100

–

(7)

–

Australian Mining & Finance Pty Limited

100

–

Cerro Vanguardia S.A.

13,875,000

92.50

–

Chevaning Mining Company Limited

1,000

100

–

Cluff Holdings Pvt Limited

–

100

–

100

–

Cluff Mineral Exploration Limited

500,000

100

–

Cluff Oil Limited

19,646,377

100

–

Cluff Resources Limited

93,638,562

100

–

Cripple Creek & Victor Gold Mining Company

(USA joint venture)

–

Erongo Holdings Limited

13,334'A'

100

–

(12)

(10)

Geita Gold Mining Limited

100

–

Golden Shamrock Mines Limited

2,000,000

100

–

GSM Gold S.A.

325,000

100

–

Mineração Serra Grande S.A.

499,999,997

–

Morila Limited

–

Pioneer Goldfields Limited

75,000,000

100

–

Sadiola Exploration Limited

5,000 'A'

–

Societé Ashanti Goldfields de Guinée S.A.

3,486,134

–

Teberebie Goldfields Limited

1,860,000

–

Joint ventures

Nufcor International Limited **

3,000,000

(2)

–

Société des Mines de Morila S.A.

400

–

Société d'Exploitation des Mines d'Or de Sadiola S.A.

38,000

–

Société d'Exploitation des Mines d'Or de Yatela S.A.

400

–

BGM Management Company Pty Ltd

3'B'

33.33

–

14,816

14,813

(1,407)

(1,194)

Nature of business

A – Mining

B – Investment holding

C – Software development

D – Market agent

E – Health care

F – Short-term insurance and re-assurance

G – Precious metal refining

H – Exploration

I – Treasury
*

Indicates preference shares

The statutory year-ends of Rand Refinery Limited and Nufcor International Limited are 30 September and 30 June respectively. The management accounts of Rand Refinery Limited and Nufcor International Limited for the

periods ended 30 September and 31 December respectively, have been included in the group’s results for the year ended 31 December 2005.

In terms of IAS 21, the Environmental Rehabilitation Trust Fund is deemed to be a subsidiary.

The aggregate interest in the net profits and losses in subsidiaries is as follows:

$ million

2005

2004

Profit attributable to equity shareholders

167

323

Losses attributable to equity shareholders

(396)

(320)

(229)

Countries of incorporation
1

Argentina

Australia

Belgium

British Virgin Islands

Brazil

Cayman Islands

Ghana

Guernsey

Isle of Man

Jersey

Luxembourg

Mali

Malta

Namibia

Republic of Guinea

Republic of South Africa

Tanzania

United Kingdom

United States of America

Zimbabwe

Democratic Republic of Congo

GLOSSARY OF TERMS

247

Mining terms

BIF

Banded Ironstone Formation. A chemically formed iron-rich sedimentary
rock.

By-products

Any products that emanate from the core process of producing gold,
including silver, uranium and sulphuric acid.

Calc-silicate rock

A metamorphic rock consisting mainly of calcium-bearing silicates such
as diopside and wollastonite, and formed by metamorphism of impure
limestone or dolomite.

Carbon-in-leach (CIL)

Gold is leached from a slurry of gold ore with cyanide in agitated tanks
and adsorbed on to carbon granules in the same circuit. The carbon
granules are separated from the slurry and treated in an elution circuit
to remove the gold.

Carbon-in-pulp (CIP)

Gold is leached conventionally from a slurry of gold ore with cyanide in
agitated tanks. The leached slurry then passes into the CIP circuit
where carbon granules are mixed with the slurry and gold is adsorbed
on to the carbon. The granules are separated from the slurry and
treated in an elution circuit to remove the gold.

Comminution

Comminution is the crushing and grinding of ore to make gold available
for treatment. (See also “Milling”).

Contained gold

The total gold content (tons multiplied by grade) of the material being
described.

Cut-off Grade (Surface Mines)

The minimum grade at which a unit of ore will be mined so as to achieve
a required mining grade and hence a desired economic outcome.

Depletion

The decrease in quantity of ore in a deposit or property resulting from
extraction or production.

Development

The process of accessing an orebody through shafts and/or tunnelling
in underground mining operations.

Diorite

An igneous rock formed by the solidification of molten material
(magma).

Electro-winning

A process of recovering gold from solution by means of electrolytic
chemical reaction into a form that can be smelted easily into gold bars.

Elution

Recovery of the gold from the activated carbon into solution before zinc
precipitation or electro-winning.

Grade

The quantity of gold contained within a unit weight of gold-bearing
material generally expressed in ounces per short ton of ore (oz/t), or
grams per metric tonne (g/t).

Greenschist

A schistose metamorphic rock whose green colour is due to the
presence of chlorite, epidote or actinolite.

Indicated Mineral Resource

An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for
which tonnage, densities, shape, physical characteristics, grade and
mineral content can be estimated with a reasonable level of confidence.
It is based on exploration, sampling and testing information gathered
through appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes. The locations are too widely or
inappropriately spaced to confirm geological and/or grade continuity
but are spaced closely enough for continuity to be assumed.

Inferred Mineral Resource

An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for
which tonnage, grade and mineral content can be estimated with a low
level of confidence. It is inferred from geological evidence and assumed
but not verified geological and/or grade continuity. It is based on
information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes which may be
limited or of uncertain quality and reliability.

Leaching

Dissolution of gold from crushed or milled material, including reclaimed
slime, prior to adsorption on to activated carbon.

Life of mine (LOM)

Number of years that the operation is planning to mine and treat ore,
and is taken from the current mine plan.

Measured Mineral Resource

A ‘Measured Mineral Resource’ is that part of a Mineral Resource for
which tonnage, densities, shape, physical characteristics, grade and
mineral content can be estimated with a high level of confidence. It is
based on detailed and reliable exploration, sampling and testing,
information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes. The locations
are spaced closely enough to confirm geological and grade continuity.

Metallurgical plant

A processing plant erected to treat ore and extract gold.

Milling

A process of reducing broken ore to a size at which concentrating can
be undertaken. (See also “Comminution”).

GLOSSARY OF TERMS

248

Mine call factor

The ratio, expressed as a percentage, of the total quantity of recovered
and unrecovered mineral product after processing with the amount
estimated in the ore based on sampling. The ratio of contained gold
delivered to the metallurgical plant divided by the estimated contained
gold of ore mined based on sampling.

Mineral deposit

A mineral deposit is a concentration (or occurrence) of material of
possible economic interest in or on the Earth’s crust.

Mineral Resource

A ‘Mineral Resource‘ is a concentration or occurrence of material of
intrinsic economic interest in or on the Earth’s crust in such form, quality
and quantity that there are reasonable prospects for eventual economic
extraction. The location, quantity, grade, geological characteristics and
continuity of a Mineral Resource are known, estimated or interpreted
from specific geological evidence and knowledge. Mineral Resources
are sub-divided, in order of increasing geological confidence, into
Inferred, Indicated and Measured categories.

Ore Reserve

An ‘Ore Reserve‘ is the economically mineable part of a Measured
and/or Indicated Mineral Resource. It includes diluting materials and
allowances for losses, which may occur when the material is mined.
Appropriate assessments and studies have been carried out, and
include consideration of and modification by realistically assumed
mining, metallurgical, economic, marketing, legal, environmental, social
and governmental factors. These assessments demonstrate that at the
time of reporting, extraction could reasonably be justified. Ore Reserves
are sub-divided in order of increasing confidence into Probable Ore
Reserves and Proved Ore Reserves.

Ounce (oz) (troy)

Used in imperial statistics. A kilogram is equal to 32.1507 ounces.
A troy ounce is equal to 31.1035 grams.

Pay limit

The grade of a unit of ore at which the revenue from the recovered
mineral content of the ore is equal to the total cash cost including
Ore Reserve Development and stay-in-business capital. This grade is
expressed as an in-situ value in grams per tonne or ounces per short
ton (before dilution and mineral losses).

Precipitate

The solid product of chemical reaction by fluids such as the zinc
precipitation referred to below.

Probable Reserve

A ‘Probable Ore Reserve’ is the economically mineable part of an
Indicated, and in some circumstances, a Measured Mineral Resource.
It includes diluting materials and allowances for losses which may occur
when the material is mined. Appropriate assessments and studies have
been carried out, and include consideration of and modification by
realistically assumed mining, metallurgical, economic, marketing, legal,
environmental, social and governmental factors. These assessments
demonstrate at the time of reporting that extraction could reasonably be
justified.

Productivity

An expression of labour productivity based either on the ratio of grams
of gold produced to the total number of employees or area mined
(in square metres) to the total number of employees in underground
mining operations.

Proved Reserve

A ‘Proved Ore Reserve’ is the economically mineable part of a
Measured Mineral Resource. It includes diluting materials and
allowances for losses which may occur when the material is mined.
Appropriate assessments and studies have been carried out, and
include consideration of and modification by realistically assumed
mining, metallurgical, economic, marketing, legal, environmental,
social and governmental factors. These assessments demonstrate at
the time of reporting that extraction could reasonably be justified.

Project capital

Capital expenditure to either bring a new operation into production; to
materially increase production capacity; or to materially extend the
productive life of an asset.

Reclamation

In the South African context, reclamation describes the process of
reclaiming slimes (tailings) dumps using high-pressure water cannons to
form a slurry which is pumped back to the metallurgical plants for
processing.

Recovered grade

The recovered mineral content per unit of ore treated.

Reef

A gold-bearing sedimentary horizon, normally a conglomerate band
that may contain economic levels of gold.

Refining

The final purification process of a metal or mineral.

Rehabilitation

The process of reclaiming land disturbed by mining to allow an
appropriate post-mining use. Rehabilitation standards are defined by
country-specific laws including, but not limited to the South African
Department of Minerals and Energy, the US Bureau of Land
Management, the US Forest Service, and the relevant Australian mining
authorities, and address among other issues, ground and surface water,
topsoil, final slope gradient, waste handling and re-vegetation issues.

Seismic event

A sudden inelastic deformation within a given volume of rock
that radiates detectable seismic waves (energy), which results from
mining activities.

Shaft

A vertical or subvertical excavation used for accessing an underground
mine; for transporting personnel, equipment and supplies; for hoisting
ore and waste; for ventilation and utilities; and/or as an auxiliary exit.

Mining terms

GLOSSARY OF TERMS

249

Mining terms

Skarn

A rock of complex mineralogical composition, formed by contact
metamorphism and metasomatism of carbonate rocks.

Smelting

A pyro-metallurgical operation in which gold is further separated from
impurities.

Stay-in-business capital

Capital expenditure to maintain existing production assets. This
includes replacement of vehicles, plant and machinery, ore reserve
development and capital expenditure related to safety, health and the
environment.

Stope

Underground excavation where the orebody is extracted.

Stoping

The process of excavating ore underground.

Stripping ratio

The ratio of waste tonnes to ore tonnes mined calculated as total
tonnes mined less ore tonnes mined divided by ore tonnes mined.

Syngenetic

Formed contemporaneously with the deposition of the sediment.

Tailings

Finely ground rock of low residual value from which valuable minerals
have been extracted.

Tailings dam (slimes dam)

Dam facilities designed to store discarded tailings.

Tonne

Used in metric statistics. Equal to 1,000 kilograms.

Ton

Used in imperial statistics. Equal to 2,000 pounds. Referred to as a
short ton.

Tonnage

Quantity of material measured in tonnes or tons.

Total cash costs

Total cash costs include site costs for all mining, processing and
administration, as well as contributions from by-products and are
inclusive of royalties and production taxes. Amortisation, rehabilitation,
corporate administration, retrenchment, capital and exploration costs
are excluded.

Total cash costs per ounce are the attributable total cash costs divided
by the attributable ounces of gold produced.

Total production costs

Total cash costs plus amortisation, retrenchment, rehabilitation and
other non-cash costs. Corporate administration, capital and exploration
costs are excluded. Total production costs per ounce are the
attributable total production costs divided by the attributable ounces of
gold produced.

Waste

Material that contains insufficient mineralisation for consideration for
future treatment and, as such, is discarded.

Yield

The amount of valuable mineral or metal recovered from each unit mass
of ore expressed as ounces per short ton or grams per metric tonne.

Zinc precipitation

Zinc precipitation is the chemical reaction using zinc dust that converts
gold in solution to a solid form for smelting into unrefined gold bars.

Financial terms

Adjusted gross margin

Adjusted gross profit (loss) divided by gold sales including realised non-
hedge derivatives.

Adjusted gross profit (loss)

Gross profit (loss) excluding unrealised non-hedge derivatives.

Adjusted headline earnings

Headline earnings excluding unrealised non-hedge derivatives, fair
value adjustments on the option component of the convertible bond,
fair value gains (losses) on interest rate swaps, and deferred tax
thereon.

Average number of employees

The monthly average attributable number of employees and contractors
employed during the year, where contractors are defined as individuals
who have entered into a fixed-term contract of employment with a
group company or subsidiary.

Capital expenditure

Total capital expenditure on tangible assets which includes stay-in-
business and project capital.

Cash gross margin

Cash gross profit (loss) divided by gold sales including realised non-
hedge derivatives.

Cash gross profit (loss)

Adjusted gross profit (loss) plus amortisation of intangible and tangible
assets less non-cash revenues.

Discontinued operation

An operation that, pursuant to a single plan, has been disposed of or
abandoned or is classified as held-for-sale.

EBITDA

Operating profit (loss) before amortisation of tangible and intangible
assets, impairment of tangible and intangible assets, profit (loss) on
disposal of assets and unrealised non-hedge derivatives, plus the share
of associates EBITDA.

Effective tax rate

Current and deferred taxation as a percentage of profit before taxation.

Equity

Shareholders' equity adjusted for other comprehensive income actuarial
gain (loss) and deferred taxation. Where average equity is referred to, this
is calculated by averaging the figures at the beginning and the end of the
financial year.

GLOSSARY OF TERMS

250

Free cash flow

Net cash inflow from operating activities less stay-in-business capital
expenditure.

Gross margin %

Adjusted gross profit (loss) as a percentage of gold income including
realised non-hedge derivatives.

Interest cover

EBITDA divided by finance costs and unwinding of decommissioning
and restoration obligations.

Market capitalisation

Number of ordinary shares in issue at close of business on
31 December multiplied by the closing share price as quoted on the
JSE Limited.

Monetary asset

An asset which will be settled in a fixed or easily determinable amount
of money.

Net asset value per share

Total equity per balance sheet divided by shares in issue.

Net capital employed

Equity as defined above plus minority interests and interest-bearing
borrowings, less cash and cash equivalents and other cash
investments. Where average net capital employed is referred to, this
is the average of the figures at the beginning and the end of the
financial year.

Net debt

Borrowings less cash and cash equivalents and other cash
investments.

Net operating assets

Tangible assets, current and non-current portion of inventories, current
and non-current trade and other receivables (excluding recoverable tax,
rebates, levies and duties), less current and non-current trade and other
payables and deferred income (excluding unearned premiums on
normal sale extended contracts).

Net tangible asset value per share

Total equity per balance sheet less intangible assets, divided by the
number of ordinary shares in issue.

Non-hedge derivative gain (loss)

Derivatives that are neither designated as meeting the normal sale
exemption under IAS39, nor designated as cash flow hedges.

Normal purchase normal sale (NPNS) exemption

Hedge contracts designated as meeting the exemption criteria under
IAS 39.

Operating special items

Material items of income and expenditure that relate to the underlying
performance of the business and require separate disclosure in
accordance with IAS 1.86. They include impairment charges and profits
and losses on disposal of tangible assets.

Price received ($/oz and R/kg)

Attributable gold income including realised non-hedge derivatives
divided by attributable ounces/kilograms sold.

Realised non-hedge derivatives

Represents the current year income statement effect of non-hedge
derivatives that were settled during the current year.

Region

Defines the operational management divisions within AngloGold Ashanti
and these are South Africa, Argentina, Australia, Brazil, Ghana, Guinea,
Mali, Namibia, Tanzania, United States of America and Zimbabwe.

Related party

Parties are considered related if one party has the ability to control the
other party or exercise significant influence over the other party in
making financial and operating decisions.

Return on equity

Adjusted headline earnings expressed as a percentage of the average
equity, adjusted for the timing of acquisitions and disposals.

Return on net capital

Adjusted headline earnings before finance costs and unwinding of
decommissioning and restoration obligations expressed as a
percentage of average net capital employed, adjusted for the timing of
acquisitions and disposals.

Significant influence

The ability, directly or indirectly, to participate in, but not exercise control
over, the financial and operating policy decision of an entity so as to
obtain economic benefit from its activities.

Unrealised non-hedge derivatives

This represents the change in fair value of all open non-hedge derivative

positions from the previous reporting date to the current reporting date.

Weighted average number of ordinary shares in issue

The number of ordinary shares in issue at the beginning of the year,

increased by shares issued during the year, weighted on a time basis

for the period during which they have participated in the income of

the group.

Financial terms

GLOSSARY OF TERMS

251

Abbreviations

United States dollars

Australian dollars

ADS

American Depositary Share

ADR

American Depositary Receipt

ARS

Argentinian peso

ASX

Australian Stock Exchange

BRL

Brazilian real

Billion

capex

Capital expenditure

CDI

Chess Depositary Interests

CHF

Swiss francs

CLR

Carbon Leader Reef

FCFA

Communauté Financiére Africaine Francs

FIFR

Fatal injury frequency rate per million hours worked

Grams

g/t

Grams per tonne

g/TEC

Grams per total employee costed

GHC

Ghanaian cedi

GhDS

Ghanaian Depositary Share

GSE

Ghana Stock Exchange

JORC

Australasian Code for Reporting of Mineral Resources
and Ore Reserves

JIBAR

Johannesburg interbank agreed rate

JSE

JSE Limited

King Code

South African King Code on Corporate Governance,
2002

Kilograms

LSE

London Stock Exchange

LIBOR

London interbank offer rate

LOM

Life of mine

LTIFR

Lost-time injury frequency rate per million hours
worked

(1)

/TEC

Square metres per total employee costed

M or m

Metre or million, depending on the context

Moz

Million ounces

Million tonnes or tons

Mtpa

Million tonnes/tons per annum

Namibian dollars

NOSA

National Occupational Safety Association

NYSE

New York Stock Exchange

Ounces (troy)

oz/t

Ounces per ton

R or ZAR

South African rands

RIFR

Reportable injury frequency rate per million hours
worked

SAMREC

South African Code for the Reporting of Mineral
Resources and Mineral Reserves

SEC

United States Securities and Exchange Commission

SRP

South African Securities Regulation Panel

SOX

Sarbanes-Oxley Act of 2002

Tons (short) or tonnes (metric)

tpm

Tonnes/tons per month

tpa

Tonnes/tons per annum

tpd

Tonnes/tons per day

VCR

Ventersdorp Contact Reef

VCT

Voluntary counselling and testing

(1)

Note that AngloGold Ashanti utilises the strictest definition in reporting Lost

Time Injuries in that it includes all Disabling Injuries (where an individual is

unable to return to his place of regular work the next calendar day after the

injury) and Restricted Work Cases (where the individual may be at work, but

unable to perform full or regular duties on the next calendar day after the injury)

within this definition.

Rounding of figures in this report may result in computational discrepancies.

The process of producing gold

The process of producing gold can be divided

into six main phases:

•

finding the orebody;

•

creating access to the orebody;

•

removing the ore by mining or breaking the

orebody;

•

transporting the broken material from the

mining face to the plants for treatment;

•

processing; and

•

refining.

This basic process applies to both underground

and surface operations.

Finding the orebody

AngloGold Ashanti’s global exploration

programme identifies targets and undertakes

exploration, on its own or in conjunction with joint

venture partners.

Creating access to the orebody

There are two types of mining which take place to

access the orebody:

•

underground – a vertical or decline shaft

(designed to transport people and/or

materials) is first sunk deep into the ground,

after which horizontal development takes

place at various levels of the main shaft or

decline. This allows for further on-reef

development of specific mining areas where

the orebody has been identified; and

•

open-pit – where the top layers of topsoil or

rock are removed in a process called

‘stripping’ to uncover the reef.

Removing the ore by mining or breaking the

orebody

•

In underground mining, holes are drilled into

the orebody, filled with explosives and then

blasted. The blasted ‘stopes’ or ‘faces’ are

then cleaned and the ore released is now

ready to be transported out of the mine.

•

In open-pit mining, drilling and blasting may

also be necessary to release the gold-

bearing rock; excavators then load the

material onto the ore transport system.

Transporting the broken material from the

mining face to the plants for treatment

•

Underground ore is transported by means of

vertical and/or horizontal transport systems.

Once on surface, conveyor belts usually

transport the ore to the treatment plants.

•

Open-pit mines transport ore to the

treatment plants in vehicles capable of

hauling huge, heavy loads.

Services

Mining activities require extensive services, both

on the surface and underground, including:

•

mining engineering services;

•

mine planning;

•

ventilation;

•

provision of consumable resources;

•

engineering services;

•

financial, administration and human resource

services; and

•

environmental/permitting services.

Processing

•

Comminution is the breaking up of ore to

make gold available for treatment.

Conventionally, this process occurs in multi-

stage crushing and milling circuits. Modern

technology is based on large mills fed directly

with run-of-mine material.

•

Gold ores can typically be classified into:

–

refractory ores, where the gold is locked

within a sulphide mineral and not readily

available for recovery by the cyanidation

process; or

–

free milling, where the gold is readily

available for recovery by the cyanidation

process.

•

Refractory ore treatment – after fine grinding,

the sulphide materials are floated away from

the barren gangue material to produce a

high-grade sulphide concentrate. The

sulphide concentrate is oxidised by either

roasting as at AngloGold Ashanti Mineração

or bacterial oxidation (BIOX) as at Obuasi.

The oxidation process oxidises the sulphide

minerals liberating the gold particles making

them amenable to recovery by the

cyanidation process.

•

Free milling and oxidised refractory ores are

processed for gold recovery by agitator

leaching the ore in an alkaline cyanide leach

solution followed generally by adsorption of

the gold cyanide complex onto activated

carbon-in-pulp (CIP).

•

The alternative process is the heap-leach

process. Generally considered applicable to

only high-tonnage, low-grade ore deposits,

The process of producing gold and rehabilitation

252

AngloGold Ashanti has successfully applied

this to medium-grade deposits where the ore

deposit tonnage cannot economically justify

constructing a process plant. Here, the run-

of-mine ore is crushed and placed on the

leach pad. Low strength alkaline cyanide

solution is applied, generally as a drip, to the

top of the heap for periods of up to three

months. The dissolved gold bearing solution

is collected from the base of the heap and

transferred to the carbon-in-solution (CIS)

columns where the gold cyanide complex

is adsorbed onto activated carbon. The

stripped solution is recycled back to the top

of the heaps.

•

Gold adsorbed onto activated carbon is

recovered by a process of re-dissolving the

gold from the activated carbon (elution),

followed by precipitation in electro-winning

cells and subsequent smelting of that

precipitate into doré bars that are shipped to

the gold refineries.

•

The retreatment of tailing stockpile from

previous decades’ operations is also

practised by AngloGold Ashanti. The old

tailings are mined by water sluicing followed

by agitator leaching in alkaline cyanide

solution and recovery of dissolved gold onto

activated carbon.

•

At AngloGold Ashanti operations, the major

by-products produced are:

–

silver, which is associated with gold in

ratios ranging from 0.1:1 to 200:1 silver to

gold;

–

sulphuric acid which is produced by

scrubbing the gases generated from the

roasting plants; and

–

uranium which is recovered in a process

which involves initial acid leaching

followed by recovery of the leached

uranium onto resin and subsequent

stripping with ammonium hydroxide and

precipitation of crude yellow cake.

•

The tailings from the process operations are

stored in designated Tailings Storage

Facilities designed to enhance water

recovery and prevent contaminant seepage

into the environment.

Refining

The doré bars, are transported to a refinery for

further refining, to as close to pure gold as

possible – good delivery status. This gives the

assurance that the bar contains the quantity and

purity of gold as stamped on the bar.

Rehabilitation

In all the jurisdictions in which the company

operates, it is required to conduct closure and

rehabilitation activities in order to return the land

to a productive state post-mining. Additionally,

these same jurisdictions require the company to

provide financial assurance, in a form prescribed

by law, to cover some, or all of the costs, of the

anticipated closure and rehabilitation costs for the

operation. Rehabilitation refers to the process of

reclaiming mined land to that which existed prior

to mining or to a pre-determined use post-mining.

Closure plans are devised prior to the

commencement of operation and are regularly

reviewed to take into account life-of-mine

projections. Although the final cost of closure

cannot be fully determined ahead of closure,

ample provision is made during the mine’s

economic operation.

THE PROCESS OF PRODUCING GOLD AND REHABILITATION

253

AngloGold Ashanti’s approach to research and

development is a combination of external private

and collaborative research and in-house research

based at the operations.

The primary external collaborative research

programmes include:

•

electric drilling: significant progress is being

made at TauTona in several key performance

areas. Productivity improvements

approximately 15% have been achieved in

terms of drilling rates and the number of

machine operators required for production.

Improvements in the cost per metre drilled

now allow the unit to compete well with

pneumatic machines at the mine. As drilling

and blasting is the fundamental rock-

breaking process in deep-level, narrow-vein

hard-rock mining, the overall objective of a

more energy-efficient stope is to move away

from compressed air as the primary source of

energy.

•

the AMIRA projects:

–

P9N: research into increasing efficiency in

comminution and flotation;

–

P420c: research into the gravity and

leaching characteristics of gold extraction

from both free milling ores and refractory

ores; and

–

P266d: research into improving the

performance of thickeners.

•

a University of British Columbia Canada

project researching the use of thiosulphate

as an alternative lixiviant to cyanide;

•

a research project to develop the scale-up

data for the thiosulphate gold leaching

process; and

•

the Mintek (a South African metallurgical

research centre based in Johannesburg)

research project, AuTEK, commissioned to

develop new industrial uses for gold. The

principal fields being investigated are those

of catalysis, medical, biological and the

nanoparticle.

Primary in-house research programmes being

carried out in conjunction with private external

technology suppliers are to:

•

investigate aspects of open-pit wall stability

design (including risk analysis design) and

continuous slope stability measurement;

•

investigate the use of GPS systems for drill

blast hole location, truck monitoring and the

management of ore placement on heaps;

•

enhance the engineering design of the New

Era Loco as an operational energy modelling

system;

•

investigate the arsenic compounds

precipitated in the process plant and their

long-term stability when discharged to

tailings storage facilities;

•

investigate variations to the mine-to-mill

process so as to improve blasting efficiencies

and effectiveness, monitor fragmentation

and improve energy efficiencies in the

comminution process. The aim is to reduce

energy and costs and improve material-

handling efficiencies;

•

develop expert control systems in both

comminution and leaching/gold recovery

circuits; and

•

develop and test a chiller performance

software programme – the final outstanding

research project within the Future Mine

programme.

In addition, AngloGold Ashanti’s wholly owned

subsidiary, ISS International Ltd, (ISSI), is a global

Research and development

254

company specialising in seismic monitoring of

mines, engineering structures and earthquakes.

The company initiates and undertakes both

broad-based and focused research and

development in a continuing quest to enhance the

safety of those working in mining by developing

effective monitoring and warning technology

systems. ISSI functions on the international stage

and its involvement in seismic matters extends

well beyond the mining environment;

As a signatory of the International Cyanide

Management Institute (ICMI) a decision was taken by

AngloGold Ashanti to comply with the International

Cyanide Management Code. Consequently, all

process operations group-wide for AngloGold

Ashanti have been audited by the in-house

corporate Cyanide Management Code audit team.

Areas of improvement have been identified at the

operations and a schedule is in place for the

operations to undergo their ICMI external audit to

verify compliance with the International Cyanide

Management Code. In addition, extensive cyanide

speciation studies have been conducted in

conjunction with Mintek at the various plants in the

South Africa region to determine, on both a macro-

and a micro-scale, the environmental impacts of

cyanide in residue material. This has enabled a

clearer understanding of the environmental impacts

of cyanide and has led to the implementation of a

strategy to ensure compliance with the requirements

of the International Cyanide Management Code.

Cyanide management covers:

•

compliance with the International Cyanide

Management Code;

•

consumption by installation of continuous

cyanide and weak-acid dissociable cyanide

measuring devices with process control base

on a forward control loop;

•

cyanide recovery using the Hannah process

system;

•

cyanide destruction using a number of

proprietary processes; and

•

cyanide destruction based on bacteria

destruction of cyanide compound.

RESEARCH AND DEVELOPMENT

255

256

Rights to mine and title to properties

AngloGold Ashanti’s rights to own and exploit mineral

reserves and deposits are governed by the laws and

regulations of the jurisdictions in which the mineral

properties are located. In a number of countries in

which AngloGold Ashanti operates there are, in some

cases, certain restrictions in terms of the group’s

ability to independently move assets out of that

country and/or transfer the assets within the group,

without the prior consent of the local government or

minority shareholders involved.

Argentina

According to Argentinian mining legislation, mines

are the private property of the nation or a province,

depending on where they are located. Individuals are

empowered to explore for, exploit and dispose of

mines as owners by means of a legal licence granted

by a competent authority under the provisions of the

Argentine Mining Code. The legal licences granted

for the exploitation of mines are valid for an

undetermined period, provided that the mining title

holder complies with the obligations settled in the

Argentine Mining Code. In Argentina, the usual ways

of transferring rights over mining licences are: to sell

the licence; to lease such licence; or to assign the

rights under such a licence by a beneficial interest or

Usufruct Agreement. In the case of Cerro Vanguardia

– AngloGold Ashanti’s operation in Argentina – the

mining title holder is its partner, Formicruz, and due

to the Usufruct Agreement signed between them and

Cerro Vanguardia SA on 27 December 1996, the

latter has the irrevocable right to the exploitation of

the deposit for a period of 40 years. This agreement

expires on 27 December 2036.

Australia

In Australia, with few exceptions, all onshore mineral

rights are reserved by the government of the relevant

state or territory. Exploration for, and mining of,

minerals is regulated by the general mining legislation

and controlled by the mining ministry of each

respective State or Territory.

Where native title has not been extinguished, native

title legislation may apply to the grant of tenure and

some subsequent administrative processes. Federal

and State Aboriginal heritage legislation also

operates to protect special sites and areas from

disturbance although to date there has not been any

adverse impact on any of AngloGold Ashanti’s

operating properties.

AngloGold Ashanti’s operating properties are

located in the state of Western Australia. The most

common forms of tenure are exploration and

prospecting licences, mining leases and general

purpose leases. In most Australian states, if the

holder of an exploration licence establishes

indications of an economic mineral deposit and

complies with the conditions of the grant, the holder

of the exploration licence has a priority right against

all others to apply for a mining lease which gives the

holder exclusive mining rights with respect to

minerals on the property.

It is possible for an individual or entity to own the

surface of the property and for another individual

or entity to own the mineral rights. Typically the

maximum initial term of a mining lease is 21 years,

and the holder has the right to renew the lease for

a further period of 21 years. Subsequent renewals

are subject to the discretion of the respective

State or Territory’s minister responsible for mining

rights. Mining leases can only be assigned with

the consent of the relevant minister.

Government royalties are payable as specified in

the relevant legislation in each State or Territory. A

general purpose lease may also be granted for

one or more of a number of permitted purposes.

These purposes include erecting, placing and

operating machinery and plant in connection with

mining operations, depositing or treating

minerals or tailings and using the land for any

other specified purpose directly connected with

mining operations.

AngloGold Ashanti owns the mineral rights and

has 21-year term mining leases with rights of

renewal to all of its mining areas in Australia,

including its proportionate share of joint venture

operations, and both the group and its joint

venture partners are fully authorised to conduct

operations in accordance with relevant laws and

regulations. The mining leases and rights of

renewal cover the current life of mine at

AngloGold Ashanti’s operations in Australia.

Brazil

In Brazil, there are two basic mining rights:

•

a licence for the exploration stage, valid up to

three years, renewable once; and

•

a Mining Concession or Mine Manifest, valid for

the life of the deposit.

In general, exploration licences are granted on a first-

come, first-served basis. Mining concessions are

granted to the holders of exploration licences that

manage to prove the existence of a mineral resource

and have been licensed by the environmental

competent authority.

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257

Mine Manifests (mining titles granted in 1936) and

Mining Concessions (mining titles presently granted

through an order signed by the Secretary of Mines of

the Ministry of Mines and Energy) are valid for an

undetermined period until depletion of reserves,

provided that the mining title holder complies with

current Brazilian mining and environmental

legislation, as well as with those requirements set out

by the National Department of Mineral Production

(DNPM) who acts as inspecting entity for mining

activities. Obligations of the titleholder include:

•

the start of construction, as per an approved

development plan, within six months of the

issuance of the concession;

•

extracting solely the substances indicated in the

concession;

•

communicating to the DNPM the discovery of a

mineral substance not included in the

concession title;

•

complying with environmental requirements;

•

restoring the areas degraded by mining; refrain

from interrupting exploitation for more than six

months; and

•

reporting annually on operations.

The difference between a Mine Manifest and a Mining

Concession lies in the legal nature of these two

mining titles, since it is much more difficult and

complicated for the public administration to withdraw

a Mine Manifest than a Mining Concession although,

in practice, it is possible for a Manifest to be

cancelled or to become extinct if the abandonment

of the mining operation is formally proven. All of

AngloGold Ashanti’s operations in Brazil have

indefinite mining licences.

Ghana

Mining activities in Ghana are primarily regulated by

the Minerals and Mining Law 1986 (PNDCL 153) or

the Mining Law. Under the Constitution and the

Mining Law, all minerals in Ghana in their natural

state are the property of the State and title to them is

vested in the President on behalf of and in trust for

the people of Ghana, with rights of prospecting,

recovery and associated land usage being granted

under licence or lease.

A licence is required for the export or disposal of

such minerals and the government has a right of

pre-emption over all such minerals. The government

of Ghana shall acquire, without payment, a 10%

interest in the rights and obligations of the mineral

operations in relation to a mineral right to

reconnaissance, prospecting or mining, and shall

have the option to acquire a further 20% interest

where any mineral is discovered in commercial

quantities, on terms agreed between the government

and the holder of the mining lease subject to

arbitration if the parties fail to agree.

A licence or lease granting a mineral right is

required to prospect for or mine a mineral in

Ghana and the Minister of Energy and Mines has

the power to negotiate, grant, revoke, suspend or

renew any mineral right, subject to a power of

disallowance exercisable within 30 days of such

grant, revocation, suspension or renewal by the

Cabinet. The powers of the Minister of Mines are

to be exercised on the advice of the Minerals

Commission, which is responsible for regulating

and managing the utilisation of natural resources

and co-ordinating policies relating to them.

The grant of a mining lease by the Minister of

Mines is normally subject to parliamentary

ratification unless the mining lease falls into a

class of transactions exempted by parliament. A

mineral right is deemed a requisite and sufficient

authority over the land in respect of which the

right is granted, although a separate licence is

required for some other activities, including the

diversion of water, and additional consents may

be required for certain developments. A mineral

right or interest therein may not be transferred,

assigned or otherwise dealt with in any other

manner without prior written approval of the

Minister of Mines.

Control of mining companies: The Minister of

Mines has the power to object to a person

becoming or remaining a ‘‘shareholder controller’’,

a ‘‘majority shareholder controller’’ or an ‘‘indirect

controller’’ of a company which has been granted

a mining lease if he considers that the public

interest would be prejudiced by the person

concerned becoming or remaining such a

controller. In this context:

•

shareholder controller means a person who,

either alone or with certain others, is entitled

to exercise or control the exercise of 20% or

more of the voting power at any general

meeting of a mining company or of any other

company of which it is a subsidiary;

•

majority shareholder controller means a

shareholder controller in whose case the

percentage referred to above also exceeds

50%; and

•

indirect controller means a person in

accordance with whose directions or

instructions the director of a mining company,

or of another company of which it is a

subsidiary, or the shareholder controllers of

that mining company, are accustomed to act.

A person may not become a shareholder

controller, a majority shareholder controller or an

indirect controller of a mining company unless

he has served written notice on the Minister of

Mines of his intention to that effect and the

Minister of Mines consents to his becoming

such a controller or does not object within a

period of six months.

Where a person becomes or continues to be a

controller of the relevant description after a notice

of objection has been served on him, or is

otherwise in contravention of the procedures

prescribed by the Mining Law, the Minister of

Mines may notify the controller that, until further

notice, any specified shares are subject to

restrictions. The relevant restrictions include

restrictions on transfer, voting rights, receipt of

further shares and distributions. The Minister of

Mines may apply to the High Court to order the

sale of any shares which are the subject of such a

restriction. There is no legal restriction on the

foreign ownership of a mining company.

Where a person, either alone or with others,

acquires an interest in 5% or more of the voting

power of a mining company he is required to

notify the Minister of Mines. A person who is a

controller of a mining company must give notice

of his ceasing to be such a controller before he

disposes of his interest. In addition, the mining

company itself has to give notice to the Minister of

Mines of the fact that any person has become or

ceased to be a controller.

Violation of these provisions of the Mining Law is

a criminal offence. The law also gives the Minister

of Mines power to investigate and report on the

ownership and control of any mining company.

The Mining Law also gives the government the

right to acquire a special share (Golden Share) in

a mining company in order to protect the assets

of the relevant company and to reflect and further

the intentions of the provisions of the Mining Law

relating to control of a mining company. The

government has retained its Golden Share in

relation to AngloGold Ashanti’s assets and

operations in Ghana.

Prior to the business combination between

AngloGold and Ashanti, AngloGold and the

government of Ghana agreed the terms of a Stability

Agreement to govern certain aspects of the fiscal

and regulatory framework under which AngloGold

Ashanti would operate in Ghana following the

implementation of the business combination.

Payments and allowances: The Mining Law

provides that royalties are payable by the holder of a

mining lease to the State at rates of between 3% and

12% of total minerals revenue, depending on a

formula set out in mineral royalty regulations. The

formula is determined by calculating the ratio of

revenue minus operating costs, interest and capital

allowances to total revenue. A ratio of 30% or lower

will attract a royalty of 3%. For every 1% that the ratio

exceeds 30%, the amount of the royalty will increase

by 0.0225% up to a maximum of 12%. The laws of

Ghana currently provide for income tax at a rate of

25%. The Mining Law provides for an entitlement to

certain specified capital allowances and various

additional fiscal and other benefits. AngloGold

Ashanti and the government of Ghana have entered

into the Stability Agreement with respect to the

payment of royalties and taxes as detailed previously.

Under the Stability Agreement, the government of

Ghana agreed:

•

to extend the term of the mining lease relating to

the Obuasi mine until 2054 on terms existing

prior to the business combination;

•

to maintain for a period of 15 years, the royalties

payable by AngloGold Ashanti with respect to

its mining operations in Ghana at a rate of 3%

per annum of the total revenue from minerals

obtained by AngloGold Ashanti from such

mining operations;

•

to maintain the corporate tax rate for AngloGold

Ashanti and cap this rate for each of its

subsidiaries in Ghana at 30% for a period of

15 years;

•

that a sale of AngloGold Ashanti’s or any of its

subsidiaries' assets located in Ghana remain

subject to the government's approval;

•

to permit AngloGold Ashanti and any or all of its

subsidiaries in Ghana to retain up to 80% of

their exportation proceeds in foreign currencies

offshore, or if such foreign currency is held in

Ghana, to guarantee the availability of such

foreign currency; and

•

to retain its special rights (Golden Share) under

the provisions of the mining law pertaining to the

control of a mining company, in respect of the

Obuasi mine.

The government of Ghana also agreed that

AngloGold Ashanti's Ghanaian operations will not be

adversely affected by any new enactments or orders

or by changes to the level of payments of any

customs or other duties relating to mining operations,

taxes, fees and other fiscal imports or laws relating to

exchange control, transfer of capital and dividend

remittance for a period of 15 years after the

completion of the business combination. In

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RIGHTS TO MINE AND TITLE TO PROPERTIES

259

consideration of these agreements and undertakings,

AngloGold Ashanti issued to the government of

Ghana 2,658,000 ordinary shares and paid to the

government of Ghana $5 million in cash, promptly

after the implementation of the business combination.

AngloGold Ashanti also paid to the government of

Ghana, on the date of the completion of the business

combination, an additional $5 million in cash towards

the transaction costs incurred by the government of

Ghana in its role as regulator.

In 2002, the Ghanaian tax legislation was changed

so that unutilised losses and capital allowances

existing at 1 January 2001 can only be carried

forward for five years. If not used by that time they

will be lost. Losses and capital allowances incurred

after 1 January 2001 can be carried forward

without limit.

Retention of foreign earnings: Holders of mining

leases have certain limited rights to retain foreign

exchange earnings overseas and to use such

earnings for the acquisition of machinery and

equipment as well as for certain other payments,

such as debt service payments and dividends.

Where the net earnings of a holder of a mining lease

are in foreign currency, the holder is permitted to

retain not less than 25% of foreign exchange

earnings in an external bank account for acquiring

machinery and equipment, spare parts and raw

materials as well as for certain other payments, such

as dividend and debt service payments.

AngloGold Ashanti’s operations in Ghana are

permitted to retain 80% of its foreign exchange

earnings in such an account. In addition, the

company has permission from the Bank of Ghana to

retain and use, outside of Ghana, dollars required to

meet payments to the company’s hedge

counterparties which cannot be met from the cash

resources of its treasury company.

Leases: Mining leases may be applied for either by a

prospecting licence holder who has established the

existence of minerals in commercial quantities or by

others who do not hold such licences, who establish

the same to the satisfaction of the Minister of Mines.

Mining leases are normally granted for a period not

exceeding 30 years and the holder may apply to the

Minister of Mines for renewal, on such conditions as

the Minister of Mines may determine, for up to

another 30 years. This period has been extended in

terms of the Stability Agreement. They are to have a

maximum size (subject to derogation by the

President where it is considered to be in the national

interest) of 50 square kilometres for any grant and

150 square kilometres in aggregate.

A holder may apply for an enlargement of the mining

area, which, subject to the Mining Law, the Minister

of Mines may grant if satisfied that such approval is

in the national interest. The rights conferred by

mining leases include those to take all reasonable

measures on or under the surface to mine the

mineral to which the mining lease relates, to erect

necessary equipment, plant and buildings, to

prospect within the mining area and to stack or

dump mineral waste in an approved manner.

Reconnaissance and prospecting licences are

normally granted for up to 12 months and three years

respectively, subject to renewal. A detailed

programme must be submitted for the recruitment

and training of Ghanaians with a view to achieving

‘localisation’, being the replacement of expatriate

personnel by Ghanaian personnel. In addition, the

holder must give preference to Ghanaian products

and personnel, to the maximum extent possible,

consistent with safety, efficiency and economies.

Prior notification to the Minister of Mines is required

for ceasing, suspending or curtailing production.

Approval to such actions may be given, subject to

conditions determined on the advice of the Minerals

Commission.

There are also provisions relating to surrender,

suspension and cancellation of mineral rights in

certain circumstances. The Minister of Mines may

suspend or cancel a mineral right if, among other

things, the holder:

•

fails to make payments under the Mining Law

when due;

•

is in breach of any provisions of the Mining Law

or the conditions of the mineral right or the

provisions of any other enactment relating to

mines and minerals;

•

becomes insolvent or bankrupt;

•

makes a statement to the Minister of Mines in

relation to the mineral right which he knows, or

ought to have known, to be false; or

•

for any reason becomes ineligible to apply for

a mineral right under the provision of the

Mining Law.

Except as otherwise provided in a specific mining

lease, all immovable assets of the holder under the

mining lease vest in the State on termination, as

does all moveable property that is fully depreciated

for tax purposes. Moveable property that is not fully

depreciated is to be offered to the State at the

depreciated cost. The holder must exercise his

rights subject to such limitations relating to surface

rights as the Minister of Mines may prescribe.

Subject to the proper conduct of the mining

operations, the holder must affect as little as

possible the interest of any lawful occupier, whose

grazing rights are retained but who is precluded

from erecting any building without the consent of

the holder (or, if such consent is unreasonably

withheld, without the consent of the Minister).

An owner or occupier of any land subject to a mineral

right may apply to the holder of the mineral right for

compensation and the amount of the compensation

shall, subject to the approval of the Land Valuation

Board, be determined by agreement between the

parties concerned (or, if they are unable to reach

agreement, by the Minister of Mines in consultation

with the Land Valuation Board). The Land Valuation

Board has in the past increased amounts of

compensation payable to owners and occupiers.

The holder, in the exercise of his rights, is required to

have due regard to the effect of the mineral

operations on the environment and is to take such

steps as may be necessary to prevent pollution of the

environment as a result of such operations.

A range of activities and breaches of the Mining

Law, including obstructing the government from

exercising its pre-emption right and conducting

mining, prospecting or related activities other than

in accordance with the Mining Law, constitute

offences punishable by fine or imprisonment. The

maximum fine is 500,000 cedis (at the current

exchange rate, equivalent to approximately

$50) and the maximum term of imprisonment is

two years.

Mining properties: The current mining lease for

the Obuasi area was granted by the government

of Ghana on 5 March 1994. It grants mining

rights to land with an area of approximately 334

square kilometres in the Amansie East and

Adansi West districts of the Ashanti region for a

term of 30

years from the date of the

agreement. In addition, the application for a

mining lease over the adjacent 140 square

kilometres has also been granted resulting in the

total area under mining lease conditions

increasing to 474 square kilometres, the Lease

Area. The company is required to pay to the

government of Ghana rent (subject to review

every five years, when the rent may be

increased by up to 20%) at a rate of

approximately $5 per square kilometres and

such royalties as are prescribed by legislation,

including royalties on timber felled within the

Lease Area.

Bibiani had title to a 50 square kilometres mining

lease for a period of 30 years to 18 May 2027. The

terms and conditions of the lease are consistent with

similar leases granted in respect of Obuasi. With

effect from 1 October 2001, the Bibiani mining lease

was transferred to Ashanti Goldfields Company

Limited from Ashanti Goldfields (Bibiani) Limited.

Iduapriem has title to a 33 square kilometres mining

lease granted on 19 April 1989 for a period of

30 years. The terms and conditions of the lease are

consistent with similar leases granted in respect of

the Obuasi mining lease.

Teberebie has two leases, one granted in

February 1998 for a term of 30 years, and another

granted in June 1992 for a term of 26 years. The

terms and conditions of these leases are

consistent with similar leases granted in respect

of the Obuasi mining lease.

Proposed amendment to Mining Law: A Minerals

and Mining Act (the Act) has been enacted by the

parliament of Ghana. If the Act receives Presidential

Assent it will repeal and replace the Minerals and

Mining Law. For the most part the Act consolidates

with modifications to the existing law.

The key material modifications to the current regime

proposed in the Act are:

•

the right of the government to acquire a 10%

‘free-carried’ interest in a mining company is to

be amended so that, in future, it will be acquired

on terms prescribed or on terms to be agreed;

the Act does not currently prescribe any terms.

In addition, the right of the government to

acquire a further 20% interest in the rights and

obligations of the mineral operations in relation

to mineral rights is to be deleted;

•

provisions for stability agreements to be entered

into by the Minister of Mines, on behalf of the

Republic, with approval of parliament to ensure

that the holders of mining rights are not

adversely affected by changes in law for a

period of 15 years and for development

agreements to be entered into, with the

approval of Parliament between the Minister of

Mines, on behalf of the Republic, and a mining

company where the proposed investment is

greater than $500 million to deal with, in

addition to matters relating to environmental

liabilities, the exercise of discretion and

settlement of disputes;

•

compensation principles for disturbance of an

owner’s surface rights;

•

royalties are payable by the holder of a mining

lease at a rate of 4% to replace the existing

sliding scale of 3-12% for gold produced from

its mining operations; and

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•

although the right of the government to be

issued with a special share in a mining company

still exists, the consent of the special

shareholder will only be required for the disposal

of a mining lease and/or material assets, which

are situated in Ghana.

Guinea

In Guinea, all mineral substances are the property

of the State. Mining activities are primarily

regulated by the Mining Code, 1995. The right to

undertake mining operations can only be acquired

by virtue of one of the following mining titles:

surveying permit, small-scale mining licence,

mining prospecting licence, mining licence or

mining concession.

The holders of mining titles are guaranteed the

right to dispose freely of their assets and to

organise their enterprises as they wish, the

freedom to engage and discharge staff in

accordance with the regulations in force, free

movement of their staff and their products

throughout Guinea and freedom to dispose of

their products in international markets.

The group’s Guinea subsidiary, Société Ashanti

Goldfields de Guinée SA (SAG), has title to the

Siguiri mining concession area which was granted

on 11 November 1993 for a period of 25 years.

The agreement provides for an eventual

extension/renegotiation after 23 years for such

periods as may be required to exhaust economic

Ore Reserves.

The original area granted encompassed

8,384 square kilometres which the subsidiary was

required to reduce to five or fewer single blocks of

not less than 250 square kilometres per block

totalling not more than 1,500 square kilometres

by 11 November 1996. The retrocession reduced

the Siguiri concession area to four blocks totalling

1,495 square kilometres.

SAG has the exclusive right to explore and mine

in the remaining Siguiri concession area for a

further 22-year period from 11 November 1996

under conditions detailed in a Convention de

Base predating the new Guinea Mining Code.

Key elements of the Convention de Base are:

•

the government of Guinea holds a 15% free-

carried or non-contributory interest; a royalty

of 3% based on a spot gold price of less than

$475, and 5% based on a spot gold price

above $475, as fixed on the London Gold

Bullion Market, is payable on the value of

gold exported; a local development tax of

0.4% is payable on the gross sales revenues;

salaries of expatriate employees are subject

to a 10% income tax; mining goods imported

into Guinea are exempt from all import taxes

and duties for the first two years of commercial

production; and

•

SAG is committed to adopt and progressively

implement a plan for the effective rehabilitation

of the mining areas disturbed or affected by

operations.

The Convention de Base is subject to early

termination if both parties formally and expressly

agree to do so, if all project activities are

voluntarily suspended for a continuous period of

eight months or are permanently abandoned by

our subsidiary or if SAG goes into voluntary

liquidation or is placed into liquidation by a court

of competent jurisdiction.

In addition to the export tax payable to the

government of Guinea, a royalty on production

may be payable to the International Finance

Corporation (IFC) and to Umicore SA, formerly

Union Miniere (UM). Pursuant to the option

agreement between UM and Golden Shamrock

Mines Limited (GSM), a royalty on production

may be payable to UM by Chevaning Mining

Company Limited (CMC) or GSM, which

payment obligation has been assigned to

AngloGold Ashanti (Ghana) Limited, on a sliding

scale of between 2.5% and 7.5%, based on the

spot gold price per ounce between $350 and

$475, subject to indexing from 1 January 1995,

to a cumulative maximum of $60 million. In

addition, under the terms of the restructuring

agreement with the IFC, a sliding scale royalty

on production may be payable to the IFC

calculated on the same basis but at half the rate

payable to UM, to a maximum of $7.8 million.

Mali

Mineral rights in Mali are governed by the Mining Act

and Regulations promulgated in 1991. Exploration is

carried out under permits granted by Ministerial

Decree following application to the National Director of

Geology and Mines from the Ministry of Mines, Energy

and Water conveying exclusive title to conduct

exploration. The permit is valid for a three-year period

and is renewable twice. A company applying (in an

area it selected) for such a permit must provide proof

of technical and financial capabilities.

An exploitation permit is required to mine a deposit

located within the exploration area. This permit

grants exclusive title to mine for a maximum period

of 30 years (inclusive of renewals) and is granted by

the Council of Ministers following application to the

National Director of Mines.

Both permits referred to above include a Mining

Convention (Convention d’Etablissement)

covering exploration, mining, treatment and

marketing in a comprehensive document. This

outlines the general conditions with regard to

exploration (work programme, fiscal and customs

regime) and exploitation (formation of a local

limited liability company and mining company,

state shareholdings, the fiscal and customs

regime during construction and exploitation

phases, exchange controls, marketing of the

product, accounting regime, training programmes

for local labour, protection of the environment,

reclamation, safety, hygiene and settlement of

disputes).

Application for an exploration permit is submitted

to the National Director of Mines based on various

documents, including applicant identification,

locations, receipts for payment of fixed rights and

surface fees, and articles of association, together

with a draft mining convention. An inter-ministerial

committee examines the applications and one

company is retained to do the exploration. This

company then negotiates a draft of the Mining

Convention and the Minister of Mines grants the

exploration permit by an in-house decree

published in the Malian Gazette.

Once an economically viable deposit has been

identified, an application for an exploitation permit is

submitted to the National Director of Mines. This

application must be made prior to the expiry of the

exploration permit. The application document must

contain a map and co-ordinates, a receipt for

payment of fixed rights and surface fees and a

summary of technical and financial capabilities. The

exploitation title is granted following a thorough

investigation.

AngloGold Ashanti has complied with all applicable

requirements and the relevant permits have been

issued. Morila, Sadiola and Yatela have 30-year

permits which expire in 2029, 2024 and 2030,

respectively.

Namibia

Mineral rights in Namibia vest in the State. In order to

prospect or mine, the Ministry of Mines and Energy

initially grants a prospecting licence and on

presentation of a feasibility study, a mining licence is

then granted taking into account the abilities of the

company, including mining, financial and technical

capabilities, rehabilitation programmes and payment

of royalties. The relevant licence has been granted to

AngloGold Namibia (Pty) Ltd in respect of its mining

and prospecting activities in Namibia. The current

15-year licence expires in 2018.

South Africa

The Mineral and Petroleum Resources

Development Act: In October 2002, the President

of South Africa assented to the Mineral and

Petroleum Resources Development Act (MPRDA),

which was passed by the Parliament of South Africa

in June 2002 and came into effect on 1 May 2004.

The MPRDA vests custodianship of South Africa’s

mineral rights in the State, which will issue

prospecting rights or mining rights to applicants in

the future. Details relating to the MPRDA and

the

associated broad-based socio-economic

empowerment charter and related scorecard, as well

as AngloGold Ashanti’s progress in converting

existing rights in terms of the new legislation, are set

out on page 103 and 104.

Tanzania

Mineral rights in the United Republic of Tanzania are

governed by the Mining Act of 1998, and property

and control over minerals are vested in the United

Republic of Tanzania. Prospecting for the mining of

minerals, except petroleum, may only be conducted

under authority of a mineral right granted by the

Ministry of Energy and Minerals under this Act.

The three types of mineral rights most often

encountered, which are also those applicable to

AngloGold Ashanti, are:

•

prospecting licences;

•

retention licences; and

•

mining licences.

A prospecting licence grants the holder thereof the

exclusive right to prospect in the area covered by the

licence for all minerals, other than building and

gemstones, for a period of three years. Thereafter,

the licence is renewable for two further periods of two

years each. On each renewal of a prospecting licence,

50% of the area covered by the licence must be

relinquished. Before application is made for a

prospecting licence, a prospecting reconnaissance

licence for a maximum area of 5,000 square

kilometres is issued for a period of two years after

which a three-year prospecting licence is applied for. A

company applying for a prospecting licence must,

RIGHTS TO MINE AND TITLE TO PROPERTIES

262

RIGHTS TO MINE AND TITLE TO PROPERTIES

263

inter alia, state the financial and technical resources

available to it. A retention licence can also be

requested from the Minister, after the expiry of the 3-

2-2-year prospecting licence period, for reasons

ranging from funds to technical considerations.

Mining is carried out through either a mining

licence or a special mining licence, both of which

confer on the holder thereof the exclusive right to

conduct mining operations in or on the area

covered by the licence. A mining licence is

granted for a period of 10 years and is renewable

for a further period of 10 years. A special mining

licence is granted for a period of 25 years and is

renewable for a further period of 25 years. If the

holder of a prospecting licence has identified a

mineral deposit within the prospecting area which

is potentially of commercial significance, but it

cannot be developed immediately by reason of

technical constraints, adverse market conditions

or other economic factors of a temporary

character, it can apply for a retention licence

which will entitle the holder thereof to apply for a

special mining licence when it sees fit to proceed

with mining operations.

A retention licence is valid for a period of five

years and is thereafter renewable for a single

period of five years. A mineral right may be freely

assigned by the holder thereof to another person,

except for a mining licence, which must have the

approval of the Ministry to be assigned.

However, this approval requirement for the

assignment of a mining licence will not apply if the

mining licence is assigned to an affiliate company

of the holder or to a financial institution or bank as

security for any loan or guarantee in respect of

mining operations.

A holder of a mineral right may enter into a

development agreement with the Ministry to

guarantee the fiscal stability of a long-term mining

project and make special provision for the

payment of royalties, taxes, fees and other fiscal

imposts.

AngloGold Ashanti has complied with all

applicable requirements and the relevant licences

have been issued for 25 years and expire in 2024.

United States of America

Mineral rights, as well as surface rights, in the United

States are owned by private parties, state

governments and the federal government. Most land

prospective for precious metals exploration,

development and mining are owned by the federal

government and are obtained through a system of

self-initiated mining claim location pursuant to the

General Mining Law of 1872, as amended.

Individual states typically follow a lease system for

state-owned minerals. Private parties have the right

to sell, lease or enter into other agreements, such as

joint ventures, with respect to minerals that they own

or control. All mining activities, regardless of whether

they are situated on privately- or publicly-owned

lands, are regulated by a myriad of federal, state and

local laws, regulations, rules and ordinances, which

address various matters including environmental

protection, mitigation and rehabilitation.

Authorisations and permits setting forth the activities

and restrictions pertaining thereto are issued by the

responsible governmental agencies for all phases of

mining activities.

The Cripple Creek & Victor Gold Mining Company

joint venture consists almost entirely of owned

patented mining claims from public lands, with a

small percentage of private and state lands being

leased. The total area of control is approximately

7,100 acres. Patented claims vest ownership in the

holder, including the right to mine for an indefinite

tenure. All life of mine reserves are within these

property controls. The mining and rehabilitation

permits issued by the State of Colorado are life of

mine permits.

Shareholders’ information

Stock exchange listings

The primary listing of the company's ordinary shares is on the JSE Limited (JSE). Its ordinary shares are also listed on stock exchanges in London,
Paris and Ghana, as well as being quoted in Brussels in the form of International Depositary Receipts (IDRs), in New York in the form of American
Depositary Shares (ADSs), in Australia, in the form of Clearing House Electronic Subregister System Depositary Interests (CDIs) and in Ghana, in the
form of Ghanaian Depositary Shares (GhDSs).

Stock exchange information at 31 December

2005

2004

2003

2002

2001

JSE (Share code: ANG)
Rands per share:
Market price

– high

319.90

319.00

339.00 347.00 248.00

– low

187.00

192.05

191.00 200.00 104.20

– year end

314.00

199.01

313.99 290.50 211.00

Shares traded

– 000

88,946

102,811

88,025 117,543 91,318

London Stock Exchange (Share code: AGD)
Pounds per share:
Market price

– high

28.25

26.45

23.68 23.26 13.90

– low

11.00

14.77

16.58 4.20 9.13

– year end

26.04

19.25

26.42 10.54 12.09

Shares traded

– 000

259

19,769

1,187 8,643

18,862

Euronext Paris (Share code: VA)
Euros per share:
Market price

– high

42.00

37.92

41.23 37.73 25.00

– low

24.18

24.90

24.10 18.78 14.26

– year end

41.29

26.60

38.00 33.00 19.53

Shares traded

– 000

855

1,552

841 1,917 1,678

Ghana Stock Exchange (Share code: AGA)
(listing commenced 27 April 2004)
Cedis per share:
Market price

– high

300,000

– – –

– low

300,000

– – –

– year end

300,000

– – –

Shares traded

– 000

–

– – –

Euronext Brussels (Share code: ANG)
Euros per IDR:
Market price

– high

41.30

37.78

40.50 37.50 24.90

– low

24.50

25.00

24.10 32.00 14.52

– year end

41.30

27.00

36.55 32.05 20.25

IDRs traded

– 000

711

477

973 3,138 1,638

Each IDR is equal to one ordinary share

New York Stock Exchange (Share code: AU)
US dollars per ADS:
Market price

– high

49.88

48.25

49.95 35.33 22.34

– low

30.50

29.91

32.80 17.62 13.15

– year end

49.33

36.35

46.70 34.26 18.06

ADSs traded

– 000

191,698

225,286

249,791 210,933 106,231

Each ADS is equal to one ordinary share

Australian Stock Exchange (Share code: AGG)
Australian dollars per CDI:
Market price

– high

13.60

12.60

13.55 12.00 8.00

– low

7.95

8.60

8.61 7.00 4.80

– year end

13.40

9.40

12.80 12.00 7.55

CDIs traded

– 000

13,691

875

12,788 6,758

62,576

Each CDI is equal to one-fifth of one ordinary share

Ghana Stock Exchange (Share code: AADS)
(listing commenced 27 April 2004)
Cedis per GhDS:
Market price

– high

3,006

– – –

– low

5,000

3,000

– – –

– year end

3,000

3,006

– – –

GhDSs traded

– 000

– – –

Each GhDS is equal to one-hundredth of one ordinary share

264

SHAREHOLDERS’ INFORMATION

265

Major shareholders

as at 31 January 2006

According to information available to the directors, the following are the only shareholders beneficially holding, directly or indirectly, in excess of 5%

of the ordinary share capital of the company:

Ordinary shares held

31 January 2006

31 December 2005

31 December 2004

Number %

Anglo American plc

134,788,099

50.85

134,788,099

50.88

134,788,099

50.97

The Bank of New York*

48,093,545

18.15

48,702,313

18.38

45,217,297

17.10

Shares held through various custodians in respect of ADSs issued by the Bank.

Voting rights

The articles of association provide that every member present at a meeting in person or, in the case of a body corporate, represented, is entitled to

one vote only on a show of hands. Upon a poll, members present or any duly appointed proxy shall have one vote for every share held. There are no

limitations on the right of non-South African shareholders to hold or exercise voting rights attaching to any shares of the company. CDI holders are

not entitled to vote in person at meetings, but may vote by way of proxy.

Options granted in terms of share incentive schemes do not carry a right to vote.

Top 20 shareholders

The 20 largest holders of the ordinary share capital of the company as at 31 December 2005 were:

Ordinary shares held

Top 20 shareholders as at 31 December 2005

Number

Anglo American plc (Main Holdings and other related funds)

134,870,452

50.91

The Bank of New York Unrestricted Depositary Receipts

28,995,315

10.94

JP Morgan Chase (Custodian)

19,955,802

7.53

The Bank of New York (Custodian)

10,626,132

4.01

ANZ Nominees Limited

10,551,988

3.98

Government of Ghana

9,031,650

3.41

Public Investment Corporation

4,037,544

1.52

Soges Fiducem SA

3,310,406

1.25

State Street Bank & Trust Co (Custodian)

2,768,373

1.04

Sanlam Group

2,497,485

0.94

National Nominees Limited

2,219,532

0.84

Investors Bank & Trust Company (Custodian)

1,743,516

0.66

Citibank (Custodian)

1,608,888

0.61

Liberty Group

1,461,363

0.55

Euroclear SA

1,281,670

0.48

Mines Pension Fund

1,108,168

0.42

Old Mutual Group

1,002,806

0.38

SIS SegaInterSettle AG (Custodian)

911,651

0.34

Mellon Bank (Custodian)

904,171

0.34

Fideuram Bank

888,975

0.34

The above list of shareholders may not necessarily reflect the beneficial shareholders.

SHAREHOLDERS’ INFORMATION

266

Analysis of ordinary shareholdings at 31 December 2005

Number of

% of total

Number of

% of shares

Size of shareholding

shareholders

issued

1 – 100 8,411

47.38

437,574

0.17

101 – 500 6,487

36.54

1,521,490

0.57

501 – 1,000 1,265

7.13

926,172

0.35

1,001 – 5,000 1,026

5.78

2,169,800

0.82

5,001 – 10,000 180

1.01

1,294,546

0.49

10,001 – 100,000 295

1.66

9,079,074

3.43

Over 100,000

0.49

249,509,777

94.18

Total

17,751

100.00

264,938,432

100.00

Shareholder spread

as at 31 December 2005

Pursuant to the Listings Requirements of the JSE, with the best knowledge of the directors and after reasonable enquiry, the spread of shareholders

was as follows:

Class

Number of shares

% of shares issued

Number of holders

Ordinary shares

Non-public shareholders:

Directors

56,642

0.02

0.05

Anglo American plc

134,788,099

50.88

0.01

Government of Ghana

9,031,650

3.41

0.01

Public shareholders

121,062,041

45.69

17,740

99.93

Total

264,938,432 100.00

17,751

100.00

redeemable preference shares

}

All shares are held by a wholly-owned subsidiary company

redeemable preference shares

SHAREHOLDERS’ INFORMATION

267

Shareholders’ diary

Financial year-end

31 December 2005

Annual financial statements

posting on or about

15 March 2006

Annual general meeting

11:00 SA time

5 May 2006

Quarterly reports

Released on or about

– Quarter ended 31 March 2006

5 May 2006

– Quarter ended 30 June 2006

27 July 2006

– Quarter ended 30 September 2006

30 October 2006

– Quarter ended 31 December 2006

8 February 2007

Dividends

Last date

to trade

Date ordinary

Payment

dividend

date to

Dividend number

declared

cum dividend

shareholders

ADS holders

GhDS holders

Final – number 99

9 February 2006

23 February 2006

10 March 2006

20 March 2006*

13 March 2006

Interim – number 100

26 July 2006*

11 August 2006*

25 August 2006*

5 September 2006*

28 August 2006*

Final – number 101

7 February 2007* 23 February 2007*

9 March 2007*

19 March 2007*

12 March 2007*

* Approximate dates.

The dividend policy is detailed in the Directors’ report.

Currency conversion guide

at 31 December

One rand was equal to:

2005

2004

Australian dollar

0.21

0.23

British pound

0.09

Euro

0.13

Ghanaian cedi

1,434.80

1,577.98

Japanese yen

18.35

18.10

Swiss franc

0.20

US dollar

0.15

0.18

Administrative information

268

AngloGold Ashanti Limited

Registration No. 1944/017354/06
Incorporated in the Republic of
South Africa

Share codes:

ISIN: ZAE000043485
JSE: ANG
LSE: AGD
NYSE: AU
ASX:

AGG

GSE (Shares):

AGA

GSE (GhDS):

AADA

Euronext Paris:

Euronext Brussels:

ANG

JSE Sponsor:

UBS

Auditors:

Ernst & Young

Offices

Registered and Corporate
11 Diagonal Street
Johannesburg 2001
(PO Box 62117, Marshalltown 2107)
South Africa
Telephone: +27 11 637 6000
Fax: +27 11 637 6624

Australia
Level 13, St Martins Tower
44 St George's Terrace
Perth, WA 6000
(PO Box Z5046, Perth WA 6831)
Australia
Telephone: +61 8 9425 4602
Fax: +61 8 9425 4662

Ghana
Gold House
Patrice Lumumba Road
(PO Box 2665)
Accra
Ghana
Telephone: +233 21 772190
Fax: +233 21 778155

United Kingdom Secretaries
St James's Corporate Services Limited
6 St James's Place
London SW1A 1NP
England
Telephone: +44 20 7499 3916
Fax: +44 20 7491 1989

Directors

Executive
R M Godsell (Chief Executive Officer)
R Carvalho Silva §
N F Nicolau
S Venkatakrishnan *
K H Williams

Non-Executive
R P Edey * (Chairman)
Dr T J Motlatsi (Deputy Chairman)
F B Arisman #
R E Bannerman ‡
Mrs E le R Bradley
C B Brayshaw
Dr S E Jonah KBE ‡
R Médori † (Alternate: P G Whitcutt)
W A Nairn (Alternate: A H Calver *)
S R Thompson *
A J Trahar
P L Zim (Alternate: D D Barber)

* British

# American

‡ Ghanaian

† French

§ Brazilian

Officers
Managing Secretary:

Ms Y Z Simelane

Company Secretary:

C R Bull

Contacts

South Africa
Charles Carter
Telephone: +27 11 637 6385
Fax: +27 11 637 6400
E-mail: cecarter@AngloGoldAshanti.com

Michael Clements
Telephone: +27 11 637 6647
Fax: +27 11 637 6400
E-mail:
mclements@AngloGoldAshanti.com

Clement Mamathuba
Telephone: +27 11 637 6223
Fax: +27 11 637 6400
E-mail:
cmamathuba@AngloGoldAshanti.com

United States of America
Andrea Maxey
Telephone: (800) 417 9255 (toll free in
USA and Canada) or +1 212 750 7999
Fax: +1 212 750 5626
E-mail: amaxey@AngloGoldAshanti.com

General E-mail enquiries
investors@AngloGoldAshanti.com

AngloGold Ashanti website
http://www.AngloGoldAshanti.com

Share Registrars

South Africa
Computershare Investor Services 2004
(Pty) Limited
Ground Floor, 70 Marshall Street
Johannesburg 2001
(PO Box 61051, Marshalltown 2107)
South Africa
Telephone: 0861 100 724 (in SA)
Fax: +27 11 688 5222
web.queries@computershare.co.za

United Kingdom
Computershare Investor Services PLC
P O Box 82
The Pavilions
Bridgwater Road
Bristol BS99 7NH
England
Telephone: +44 870 702 0000
Fax: +44 870 703 6119

Australia
Computershare Investor Services
Pty Limited
Level 2, 45 St George's Terrace
Perth, WA 6000
(GPO Box D182 Perth, WA 6840)
Australia
Telephone: +61 8 9323 2000
Telephone: 1300 55 7010 (in Australia)
Fax: +61 8 9323 2033

Ghana
NTHC Limited *
Martco House
Off Kwame Nkrumah Avenue
PO Box K1A 9563 Airport
Accra
Ghana
Telephone: +233 21 238492-3
Fax: +233 21 229975

* GhDS registrars

ADR Depositary

The Bank of New York (BoNY)
Investor Services, P O Box 11258
Church Street Station
New York, NY 10286-1258
United States of America
Telephone: +1 888 269 2377 (Toll free in
USA) or +9 610 382 7836 outside USA)
E-mail: shareowners@bankofny.com
Website: http://www.stockbny.com

Global BuyDIRECT

BoNY maintains a direct share purchase
and dividend reinvestment plan for
AngloGold Ashanti.

Telephone: +1-888-BNY-ADRS

The Annual Report 2005 is available in printed or CD format from the contacts whose details appear above or on the Internet
at the above website address. In addition, AngloGold Ashanti must by no later than 30 June 2006 produce a Form 20-F
(a report required by the Securities and Exchange Commission in the United States), copies of which will be available free of
charge on EDGAR at www.sec.gov, or from the contacts detailed above.

Supplementary information on Mineral Resources, Ore Reserves and development, prepared on a business unit basis, is
obtainable from the above sources as well as in PDF format on the AngloGold Ashanti website. Plans of the South Africa region
underground workings are also available on request.

www.anglogoldashanti.com

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has

duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

AngloGold Ashanti Limited

Date:

MARCH 15, 2006

By: /s/ C R BULL

Name: C R Bull
Title: Company Secretary